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Private equity group EQT has made an all-cash offer for Swedish software group Fortnox together with the company’s largest shareholder and chair Olof Hallrup, sending shares up 35 per cent.
The bid, which values the company at $5.5bn, caps a tumultuous year for Fortnox, an accounting software specialist that operates only in Sweden. Former chief executive Tommy Eklund resigned in August 2024 following scrutiny of the company’s accounts and disclosure practices.
The bidders have said they will not increase their offer of SKr90 per share, with the company noting that the statement was binding under takeover rules. Hallrup’s vehicle First Kraft owned 18.9 per cent of its shares as of the end of last year.
Short sellers had drawn attention to Fortnox’s very regular customer growth and its accounting practices. Its shares fell more than 12 per cent in March last year after a report by the Financial Times.
One short seller said they were “gobsmacked” by the bid, given that the company said it had not disclosed any inside information to the bidder during the due diligence process.
Critics have questioned the potential for sales growth at a company that dominates its home market, in an industry where entrenched market positions and local accounting practices make cross-border mergers difficult.
Roger Hartelius, a former chief financial officer, is acting as chief executive while the search for a replacement continues. Due to conflicts of interest affecting two Fortnox board members, the group said it would seek an opinion from accounting firm EY on the offer.
“With high expectations for the future, reflected in Fortnox’s current valuation, the consortium believes that Fortnox stands at a critical juncture, where future growth will require significant investment in product development and potential M&A initiatives,” said Omega II, the vehicle for the bidders.
Fortnox became popular among small- and medium-sized businesses by partnering with accounting firms that used the software and recommended it to their clients.
In the past year, it has faced increased scrutiny subsequent to Eklund rebranding the two-decade-old business as a start-up. Before he was appointed in 2020, it said it served 40 per cent of the country’s small businesses.
Under Eklund, Fortnox almost doubled its estimate of the size of the addressable market, while reporting very regular customer growth.
The proposed deal values the group at about 75 times consensus earning estimates for this year. An offer document is expected to be published in mid-May, with shareholders likely to have until the middle of June to accept.
EQT is a Swedish asset manager listed on the Nasdaq Stockholm index with a focus on private equity, venture capital and specialised investment funds.
