Shares digital

Software maker and IT consultancy Civica (CIV:AIM) is in the frame for renewed takeover activity. Solid financial results reported last month suggest a recovery is in sight for the business which had suffered from slow activities in the UK local government market. A private equity bid collapsed last June, leaving its share price in tatters. Having now moved back into profit and declared an upbeat outlook, Civica is looking too cheap to ignore.

The shares have started to recover since falling 45% to 152p in the six months after the failed bid – thought to be from Alchemy Partners. Nevertheless, they are still trading on a PE of 7.8. This is a 50% discount to its software sector average and still low enough to attract predators seeking a bargain.

Civica provides software, consulting and managed services to the public sector in the areas of local government, justice, education and housing.

The company wants to build scale internationally. Instead of making its own acquisitions, it is logical to combine Civica with other public sector software specialists such as Northgate Information Solutions (NIS) and Anite (AIE) – both of whom are currently in takeover play.

Private equity group Kohlberg Kravis Roberts has offered to buy Northgate for £593 million. Anite is understood to have been approached with several proposals for its public sector division, thought to be from trade buyers.