World Wide Technology Holding Co. Ltd today announced plans to acquire rival Softchoice Corp. for $1.8 billion Canadian dollars, or about $1.25 billion.

The all-cash offer values Toronto-based Softchoice at C$24.5 per share. That’s a premium of more than 10% to the company’s Monday close and 62% higher than the price at which it went public in 2021.

St. Louis, Missouri-based WWT is a major provider of information technology services that generates about $20 billion in annual revenue. The company helps enterprises move applications to the cloud, deploy artificial intelligence models and carry out other IT projects. Additionally, it builds small-scale test data centers where customers can evaluate new technologies before incorporating them into their production infrastructure.

Softchoice likewise provides IT services, but with a narrower focus. It generates most of its revenue from three sources: cloud, digital workplace and software management projects.

The company’s cloud unit helps companies move on-premises applications to infrastructure-as-a-service platforms. Additionally, it can improve the performance and security of the workloads that are already running off-premises. The company’s Software & Cloud revenue segment accounts for more than two thirds of its revenue.

Its digital workplace unit, its second major revenue source, helps enterprises adopt technologies that can make their employees more productive. The company’s third core business is its software management unit, which maintains organizations’ software licenses on their behalf. It identifies unnecessary licenses and cases where an enterprise may use an application in breach of the developer’s usage terms. 

Softchoice posted gross sales of C$628.6 million last quarter, a 20.3% increase over the same time a year ago. The company generates its revenue from a customer base of more than 5,000 organizations. Most of those customers are small and midsize businesses with up to C$10 million in annual revenue.

According to WWT, the acquisition will help enhance its market presence in Canada and the U.S. mid-market segment. Softchoice is also expected to bolster its cloud, cybersecurity and AI capabilities. 

“This acquisition strengthens our access to commercial, small and medium business customers while expanding WWT’s position in the U.S., Canada and around the world,” said WWT founder and Chair David Steward.  

Softchoice investors with 51.3% of its outstanding shares have signed agreements backing the proposed acquisition. At the same time, the transaction terms allow the former company to seek a more competitive offer before completing the transaction. If no such bid emerges, the acquisition will close in the first or second quarter of 2025 pending regulatory approval.

Photo: WWT