Kofax Plc said completion of the sale of its non-core hardware business has been delayed by around two months. Jefferies & Co. said the delayed hardware business sale does not impact its investment case.
The delay appears to be related to the administrative processes required to be completed prior to sale, and there doesn't appear to be any risk of non-completion. Recent contract momentum remains strong and as such the investment case is unchanged, said Graeme Clark, an analyst at Jefferies.
Kofax said that the impending completion of the sale of its non-core hardware business has been delayed. The deal, which was announced in January 17, was due to close in March but is now expected to complete in May.
Clark said Kofax has confirmed that the delay is due to a combination slightly longer timescales to create the required legal entities and to complete the necessary regulatory filings in order to complete the spin off and transfer of the business to the new owners, Hannover Finanz. The delays have been particular issues in the United Arab Emirates, South Africa and certain other countries.
Kofax confirmed that completion of the sale is now expected by the end of May. The delayed completion does not, in Clark's view, have any impact on Kofax's business with the deal due to complete before the end of the financial year to June 2011.
Clark said after a particularly strong first half of 2011, when Kofax reported organic growth of 19 percent from its software business, contract momentum has continued into the second half of the year.
Clark said his monitoring of Kofax's contract announcements shows a number of major deals across the business, including three invoice processing solutions ranging in value from $200,000+ to $900,000+ and an Enterprise Capture deal worth more than $700,000.
With the business momentum unchanged and the sale of the hardware business expected before the end of the current financial year, our investment case remains unchanged. We maintain our buy rating and 598 pence per share price target on Kofax, said Clark.
Kofax is a global vendor of software for information capture. The company has its operating headquarters in Irvine, California and is listed on the London Stock Exchange. Primary operations are in the United Kingdom, Europe, Asia-Pacific and in Australia, but the company sells its products globally via a large base of channel partners.
Kofax was formerly known as DICOM and started life as a distribution business, over time acquiring a series of proprietary technology businesses that have transformed the company into a highly-regarded software business and global leader by market share in the information capture market.
Kofax stock fell 3.18 percent to 518 pence on the London Stock Exchange at 11:32 am BST.