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Transactions

June 2012
Hornsby, Australia
has been acquired by
Stamford, Connecticut


Background

Ideas International (“IDEAS” or the “Company”), based near Sydney and publicly traded on the Australian Stock Exchange (ASX:IDE) provides enterprise IT research, insight, analysis, and tools to computer suppliers and consultants and large corporations. The Company’s research is focused on areas such as computer servers, storage, software, and cloud. The Company boasts users in over 100 countries supported from offices in the US, Europe and Australia.

The founders and current management of IDEAS had been involved for nearly 25 years.  They controlled  over 50 percent of the stock and large portion of the rest was controlled by friends and investors that they had brought into the Company.  IDEAS invested heavily in the development of new products and geographic expansion.  As a result the company had little reportable profit.  Further, while the company continued to add customers and users, most of the Company’s growth was hidden, as a result of the Australian dollars continuous rise against the US dollar and against European currencies.  97% of revenue was received in currencies other than the Australian Dollar, however 50% of costs were in Australian Dollars.  As a result, in local currency terms, revenue growth and profit looked anemic and IDEAS’ stock price languished.

The founders were frustrated at the lack of liquidity in their stock as well as its relatively low share price.  They had been approached and had acquisition discussions with several firms in the past, to no avail.  They asked Marlin & Associates (“M&A”) to help find a suitable buyer.

On June 4, 2012, Board of IDEAS announced its agreement to support acquisition by Gartner, Inc. (NYSE: IT), one of the world's leading information technology research and advisory company at a price per share that was about 40% above the price when M&A started working with the company.



Overview

The process started in spring of 2011.  Even though IDEAS was a relatively small, publicly listed company, based in Australia and targeting a niche segment, M&A was able to quickly identify multiple parties in the US, Asia and Europe that were likely potential buyers.  M&A organized a dedicated team to work with IDEAS’ management to develop materials that would seamlessly communicate the Company’s product, story and financials that thoroughly explained the underlying ‘real’ growth and profit (excluding FX impact). 

M&A then managed a competitive process providing additional materials to the parties indicating potential interest and spending time with these parties to ensure that they understood the Company’s unique value proposition.   When the process narrowed to a few interested parties, M&A advised IDEAS’ board on negotiation strategies, while at the same time communicating with the Company’s disparate shareholder base (including management shareholders, former employees, founders, and several institutional investors) to review the Company’s options.  After an extended period of discussions with three parties and multiple indications of interest, the board and IDEAS’ shareholders approved Gartner’s offer.

M&A Role

Marlin & Associates acted as exclusive strategic and financial advisor to IDEAS.  M&A leveraged its domain expertise and cross-border execution experience to advise the IDEAS board and its management through a complex process that involved parties in the US and Australia.  M&A worked diligently on the deal to craft materials, initiate conversations and negotiate alternative offers with manage complex due diligence reviews and to negotiate final legal documents.  M&A’s senior team was personally and intimately involved at every step of the way.

Press

Ideas International Recommends Cash Takeover Offer by Gartner

June 04, 2012

Takeover Offer Highlights

  • Gartner announces a conditional cash offer for IDEAS shares of AUD1.40 each.
  • The directors of IDEAS unanimously recommend that shareholders accept the offer, in the absence of a superior proposal.
  • The offer price represents a premium of 9% over the 3 month VWAP, premium of 18% over the 6 month VWAP and premium of 33% over the 12 month VWAP.
  • The offer is presently expected to commence on or about 7 May 2012 and will be open for 1 month, unless extended.

Sydney, Australia: Ideas International Limited (IDEAS) (ASX:IDE) and Gartner, Inc. (NYSE: IT) (Gartner) are pleased to announce today that IDEAS has entered into a Takeover Bid Implementation Agreement with Gartner Australasia Pty Ltd (Gartner Australasia), a subsidiary of Gartner. Under this agreement, Gartner Australasia will make an offer to acquire all of the issued ordinary shares of IDEAS (Shares) at AUD1.40 per Share (Takeover Offer), for an aggregate purchase price of approximately AUD20 million. Gartner Australasia intends to finance the Takeover Offer out of its existing cash reserves.

Recommendation of Directors

The board of directors of IDEAS unanimously recommends to its shareholders to accept the Takeover Offer from Gartner Australasia in the absence of a superior proposal. Furthermore, all directors of IDEAS have indicated that they intend to accept the Takeover Offer regarding all Shares that they own or control, in the absence of a superior proposal.

Statement from IDEAS’ CEO

“Gartner is the world’s leading technology research and advisory company and the fit for our clients, products and staff couldn’t be better,” said Stephen Bowhill, CEO, IDEAS. “Gartner will invest in our world-class product suite and utilize its large sales organization to introduce the value of IDEAS to the global marketplace. This will cement IDEAS as the leading provider of intelligence on IT infrastructure configurations and pricing data to IT professionals.”

Reasons for shareholders to accept the Takeover Offer

The Target’s Statement will contain a detailed list of risks and reasons for accepting the Takeover Offer, some of the primary reasons for accepting include:

1. The market for the Shares on ASX is highly illiquid and you may have limited alternative opportunities to exit your investment at or near the offer price if all shareholders wished to sell their Shares at or around the same time.

2. The offer price represents a:

  • premium of 0.43% over the Volume Weighted Average Price (VWAP) for the Shares over the past 30 days of AUD1.39;
  • premium of 9% over the VWAP for the Shares over the past 3 months of AUD1.29;
  • premium of 18% over the VWAP for the Shares over the past 6 months of AUD1.18; and
  • premium of 33% over the VWAP for the Shares over the past 12 months of AUD1.05.

3. No competing takeover proposal has emerged at this time and the directors do not expect a competing takeover proposal to emerge in the near future.

4. IDEAS Share price may fall if the Offer is not successful.

Conditions of the Offer

The Takeover Offer is subject to a number of conditions, including the requirement that Gartner Australasia acquires a relevant interest in at least 90% of the Shares; that the S&P ASX 100 index does not decline by more than 10% between the date of this announcement and the close of the Takeover Offer; and that no material adverse change occurs from the date of this announcement until the end of the Takeover Offer period.

A summary of the key terms of the Takeover Bid Implementation Agreement, including the full list of Takeover Offer conditions, is set out in Annexure A to this announcement.

Pre-bid Acceptance Agreements

Stephen Bowhill, CEO of IDEAS and Ian Birks, a director of IDEAS, and Castlequest Corporation, the largest shareholder of IDEAS, have entered into Pre-bid Acceptance Agreements with Gartner Australasia to accept the Takeover Offer regarding a portion of their Shares. Together, this gives Gartner Australasia a relevant interest in 19.9% of the Shares as of the date of this announcement.

Option Transfer Agreements

Gartner Australasia has agreed with its major IDEAS option holder to acquire and intends to acquire from the remaining IDEAS option holders all of the IDEAS options pursuant to separate Option Transfer Agreements for an amount equal to the Offer Price less the exercise price of the IDEAS Options. Acquisition of the IDEAS options is conditional on certain matters, including the Takeover Offer being declared free from all conditions and Gartner Australasia having acquired voting power in Ideas International of at least 50.1%.

Indicative Timetable

The Bidder’s Statement and the Target’s Statement are presently expected to be lodged with ASIC on or around May 7 and will be dispatched to IDEAS shareholders shortly afterwards. The Offer will be open for one month, unless extended. Shareholders are urged to read the Bidder’s and Target’s Statements, and to obtain independent legal, tax and financial advice, before making their decision.

Marlin & Associates have acted as financial advisor to IDEAS in connection with the transaction.

Sparke Helmore Lawyers have acted as legal advisor to IDEAS in connection with the transaction.

About Ideas International

IDEAS provides enterprise IT research, insight, analysis, and tools to computer suppliers and consultants (IT Sellers) and large corporations (IT Buyers). The company’s research focus areas include servers, storage, software, services, and cloud. Many IDEAS tools are powered by RPE2, the atomic unit of compute. IDEAS is a publicly traded company on the Australian Securities Exchange (ASX:IDE) and has been in business for over 25 years. IDEAS hosts users in over 100 countries and maintains offices in the US, EMEA, and Asia Pacific. For more information visit www.ideasinternational.com

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors,  Gartner is a valuable partner to 12,400 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 5,000 associates, including 1,295 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

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