World Wide Technology (WWT), a St. Louis-based tech services company, has announced a significant acquisition of Canadian IT solutions provider Softchoice in a deal valued at $1.8 billion CAD (~$1.25 billion USD). The all-cash agreement, revealed on Tuesday, marks a major milestone in the tech industry as the year comes to a close. This strategic move highlights the growing trend of consolidation in the IT sector, with companies aiming to enhance their capabilities in a rapidly evolving market.
The deal has been unanimously approved by Softchoice’s board of directors, but it remains subject to approval by shareholders, court confirmation, and other customary closing conditions. Both companies anticipate finalizing the transaction by late Q1 or early Q2 of 2025. If the deal fails to close, Softchoice could face a termination fee of CAD 49 million (~ USD 34 million). Despite this, Softchoice’s board retains the right to consider other offers during the interim period.
WWT’s acquisition of Softchoice is driven by the potential to integrate the Canadian firm’s expertise in software, cloud computing, artificial intelligence, and cybersecurity into its existing product and service portfolio. Softchoice, founded in 1989 by David Holgate and Jone Panavas, has grown from a supplier of hard-to-find software into one of North America’s leading IT solutions and services providers. Over the years, it has developed a strong reputation for helping businesses leverage technology to drive growth and efficiency.
Jim Kavanaugh, WWT’s co-founder and CEO, emphasized the importance of this acquisition in a statement. “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.”
Softchoice has demonstrated robust financial performance in recent years. In Q3 2024, the company reported a 10% year-over-year increase in gross profit and an 8% rise in net income. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $23.2 million, marking a 2.2% increase from the same period in 2023. This financial strength, combined with its expanding customer base, makes Softchoice a valuable addition to WWT’s portfolio.
WWT’s offer represents a significant return for Softchoice shareholders, providing an estimated 62% increase over the company’s 2021 IPO price on the Toronto Stock Exchange (TSX). Should the transaction proceed as planned, Softchoice will delist from the TSX, signaling a new chapter in its growth story.
Softchoice’s president and CEO, Andrew Caprara, expressed enthusiasm for the merger, citing the strategic benefits of joining forces with WWT. “We are excited to join WWT,” Caprara said. “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, Canadian presence, and strength in the North American mid-market.”
WWT, founded in 1990 by Jim Kavanaugh and David Steward, has grown into a global IT services powerhouse with annual revenues of approximately $20 billion. The company employs over 10,000 people and specializes in helping customers conceptualize, test, and deploy advanced tech solutions, including cloud computing, data center infrastructure, and application development. The acquisition of Softchoice marks WWT’s third acquisition in its history, following its purchase of Baltimore-based Performance Technology Group in 2010 and software firm Asynchrony in 2015.
The deal underscores a broader trend of consolidation within the IT industry as companies seek to address the increasing demand for comprehensive digital transformation services. By combining Softchoice’s specialized offerings with its infrastructure capabilities, WWT aims to position itself as a leader in the highly competitive IT solutions market.
This acquisition also highlights the importance of collaboration and innovation in shaping the future of IT services. As businesses across industries continue to prioritize digital transformation, partnerships like this one are expected to play a crucial role in driving technological advancements and delivering value to clients worldwide.
For both WWT and Softchoice, this merger represents an opportunity to align their strengths and expand their reach. It reflects a shared commitment to innovation, customer success, and staying ahead in an ever-evolving technology landscape. As the deal progresses toward completion, it marks a significant step forward for both companies and sets the stage for future growth and success.