威科集团收购Brightflag——非常合适但价格昂贵

Brightflag acquisition - great fitbut expensive First Look Wolters is buying asoftwarebusiness helping corporate legalteams manage legal processes. It is growing fast, is cloud-based and AI-driven and is not cheap at c.15x 2025 sales.They expect strong growth and margin improvement. Theprice is high but this looks like a perfect Wolters business. WLSNc.AS/WKL NAOVERWEIGHTEuropean MediaNEUTRALPrice TargetEUR 180.00Price (28-May-25)EUR 158.40Potential Upside/Downside+13.6%Source: Bloomberg, Barclays Research European Media Wolters Kluwer has announced an agreement to acquire Brightflag (private), an Ireland-locatedcloud-based provider of legal spend and matter managementsoftwarefor c. €425 million incash (c.1% of Wolters market cap). In simple terms their tools help legal teams at corporates,typically mid-sized ones, 1) manage legal projects; 2) collaborate with law firms and outsidecounsel, and 3) control spending. Wolters alreadyoffersthese kinds of tools (the EnterpriseLegal Managementsoftwareunit within the Legal & Regulatory division) but much moreweighted to large organisations and focused on the US. There are 155 employees. Nick Dempsey+44 (0)20 3134 5888nick.dempsey@barclays.comBarclays, UK Aytaj Khalilli+44 (0)20 3134 2536aytaj.khalilli1@barclays.comBarclays, UK They expect the acquisition not to have a material impact on adjusted earnings in the "nearterm". Then they expect it to "achieve a return on invested capital (ROIC) at or above WoltersKluwer’saftertax weighted average cost of capital (8%) in itsfifthfull year of ownership". In 2024, Brightflag delivered revenues of €22 million, growing 36% yoy. As of April 2025, itattained €27 million of annual recurring revenue. 95% of revenues are recurring and c. 60% iscoming from US (with the rest mostly from Europe). Adding €425m to our net debt with limited profit, for illustrative purposes, would take end 2025net debt/EBITDA from 1.9x to c.2.1x in our model, all things equal. And it would add around€15-20m to net interest on a FY basis. High multiple - needs lots of profit growth to hit ROIC target Wolters does not seem to believe in acquisitions at a low multiple which can be accretive toprofit, if they are not very accretive to group revenue growth - or that is the pattern of the last5-7 years. This means they have never done a deal at low multiples so far. The approach hashelped organic revenue growth somewhat. But at 19x 2024 revenue or around 15x 2025E revenue, this is probably the most expensive dealthey have done. Barclays Capital Inc. and/or one of itsaffiliatesdoes and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that couldaffectthe objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts basedoutside the US who are not registered/qualified as research analysts with FINRA. Please see analyst certifications and important disclosures beginning on page 3.Completed: 29-May-25, 07:24 GMTReleased: 29-May-25, 07:25 GMTRestricted - External Our quick illustrative maths on the ROIC target byfifthfull year of ownership (2030) points to aneed for revenue growth in the 20s out to 2030 and an operating profit margin going from alikely low level now to around 50% by 2030. It seems logical this unit can grow well and seegood operational gearing (and synergies). But we cannot know exactly how achievable that is. Strategic fit looks sensible: this is the kind of business Wolters should own As with the RASi acquisition in the FCC division, this is an area Wolters knows well and this dealgets them into a slightlydifferentsegment: mid-sized corporates and Europe. We think that thestrategic fit looks very sensible and there can be revenue synergies Overall this deal is expensive but the asset looks like a perfect Wolters business. Analyst(s) Certification(s): I, Nick Dempsey, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subjectsecurities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specificrecommendations or views expressed in this research report. Important Disclosures: Barclays Research is produced by the Investment Bank of Barclays Bank PLC and itsaffiliates(collectively and each individually, "Barclays"). Allauthors contributing to this research report are Research Analysts unless otherwise indicated. The publication date at the top of the report reflects thelocal time where the report was produced and maydifferfrom the release date provided in GMT. Availability of Disclosures: Where any companies are the subject of this research report, for current important disclosures regarding those companies plea