Pressure is mounting on accountancy software vendor Sage to come clean about its acquisition strategy, after its takeover target Pegasus and reseller launched protests on anti-competitive grounds.
Pegasus reseller Diskel has expressed concern to the Office of Fair Trading after Sage said it was considering making a cash offer for Kettering-based Pegasus on 22 December 1999.
The move came just a day after Pegasus revealed it had recommended a cash offer of £30m from Australian software group Solution 6. If a bid from Sage materialises, it will be the Newcastle vendor's second stab at buying its arch-rival. Its previous attempt failed in 1996.
John Levell, managing director of Diskel, told Computer Reseller News: "Sage and Pegasus account for a very substantial proportion of the market for lower and mid-range financial systems. The level of competition between the two has promoted product development in the UK and it is very important that this level of competition remains.
"Sage has been making a pincer movement around Pegasus since its acquisition of Tetra last year, and every time Pegasus is involved in investment activity, there are murmurs from the Sage camp. It is muddying the waters," he added.
Chris Leak, commercial director of Pegasus, said the vendor would be complaining to the Takeover Panel to "seek clarification" on Sage's position.
"Sage has never bid for a public company before. What it is doing creates false expectations and creates a false market in shares of Pegasus," he claimed.
"Sage doesn't want anyone else to get hold of Pegasus's assets, but it knows it will find it very difficult to get hold of them because of regulatory reasons. We've said to Sage in the past that if it can get round the competitive issues, we will talk to it. It's time for Sage to put up or shut up," he added.
John Savage, managing director of Sage reseller Savtec, said the acquisition of Pegasus by Sage would not be good for the market. "But if someone else bought Pegasus, it would give Sage a run for its money."
John Tate, chairman of Great Plains and Systems Union reseller Tate Bramald, agreed Sage would struggle to gain regulatory approval for acquiring Pegasus.
"Intervention by the OFT and the DTI was supposed to be a major factor in Sage's bid for Pegasus last time, and that was before it acquired Tetra."
Sage declined to comment further.
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