WWT Acquires Canadian IT Provider Softchoice in All-Cash Deal

On Tuesday, January 1st, 2025, World Wide Technology (WWT), a leading tech services company based in St. Louis, Missouri, announced that it has agreed to acquire Canadian IT provider Softchoice in an all-cash deal worth $1.8 billion CAD (~$1.25 billion USD). This acquisition marks the culmination of an eventful 2024 for both companies and is set to create a significant player in the North American tech market.

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A History of Growth and Evolution

Softchoice, founded in 1989 by David Holgate and Jone Panavas, has come a long way since its humble beginnings as a supplier of hard-to-find software products to enterprise customers. Over the years, the company has grown and evolved, expanding its product portfolio and services to become one of the largest tech solutions and services providers in North America.

In 2013, private equity firm Birch Hill acquired Softchoice for C$412 million (~$286 million USD), according to Crunchbase. Fast forward to 2021, when the company filed for an initial public offering (IPO) on the Toronto Stock Exchange (TSX), valuing it at around C$1.15 billion (~$800 million USD). This marked a significant milestone in Softchoice’s journey, and its financials have been strong ever since.

A Decade of Growth and Innovation

Softchoice has reported impressive growth over the past decade. In Q3 2024, the company posted a 10% year-over-year increase in gross profit and an 8% uptick in net income, driven by an expanding customer base. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $23.2 million for the quarter, up 2.2% from Q3 2023.

WWT’s Offer Represents a 62% Total Shareholder Return

According to WWT, its offer represents a total shareholder return of around 62% over Softchoice’s initial public offering price. Should the deal go through, Softchoice will delist from TSX. This acquisition marks WWT’s third in its history, with previous deals including the acquisitions of Performance Technology Group and Asynchrony.

A Strategic Fit for Both Companies

WWT’s co-founder and CEO, Jim Kavanaugh, expressed his enthusiasm for the deal, stating that Softchoice’s software, cloud, cybersecurity, and AI capabilities will complement WWT’s existing product portfolio. "Softchoice has been a transformative player in the IT industry for over 35 years," he said. "This acquisition will enable us to create even greater value for our clients striving to achieve their digital transformation goals."

Andrew Caprara, Softchoice president and CEO, added: "We are excited to join WWT. Its scale and global reach, customer base of large organizations, and industry-leading infrastructure solutions are a perfect complement to our software and cloud-focused solutions, our Canadian presence, and our strength in the North American mid-market."

Court Approval and Closing Conditions

The deal is subject to court approval and customary closing conditions, with WWT expecting it to be finalized in late Q1 or early Q2 2025. If the deal does not go through, Softchoice could face a $49 million CAD (~$34 million USD) termination fee. The company’s board of directors has approved the transaction, but shareholders will still need to vote on the proposal.

A New Era for WWT and Softchoice

This acquisition marks a significant milestone in the history of both companies. With WWT’s global reach and Softchoice’s expertise in software, cloud, cybersecurity, and AI, the combined entity is poised to become a major player in the North American tech market. The deal represents a vote of confidence in the future of both companies and sets the stage for further growth and innovation.

What This Means for the Tech Industry

The acquisition highlights the ongoing trend of consolidation in the tech industry, with larger players seeking to expand their reach through strategic acquisitions. WWT’s move into the Canadian market is a significant development, as it positions the company for continued growth and expansion north of the border. As the tech landscape continues to evolve, this deal serves as a reminder that partnerships and collaborations can be key drivers of innovation and success.