Reckon back in bright lights, special dividend promised

The capital returns are set to float at business software groupReckon - and its biggest shareholder cannot wait.

Reckonsigned a $100 million deal to sell its practice management group, which sellspractice management and compliance software to accounting firms, to UK-foundedThe Access Group, in a deal stitched up by Rothschild & Co.

Sam Allert, Reckon CEO. Rob Homer

The sale, for about the same value as Reckon’s market capitalisation, sent the stock soaring 45 per cent.

Caught inthe friendly fire was its 19.9 per cent shareholder and strategic partner, thelisted Novatti Group, which ducked into the cover of a trading halt while itworked out what had gone on and how to explain it to its own investors.

Novatti’sexpected to tell shareholders it likes the look of Reckon’s sale and promisedspecial dividend, before it resumes trading. It also wants to point out that itgets to keep its strategic arrangement with the Reckon, which is in theretained cloud-based accounting and payroll software business.

The big question is whether the sale puts a target on Reckon’s back. The company’s soon to have $100 million in its pocket, along with its two remaining business units: accounting and legal practice management software.

Of courseold-headed fund managers have seen all this before.

For years,Reckon was touted as a takeover target, with the spruikers talking up Sage,Intuit and MYOB as potential buyers. Intuit was the big hope a decade ago,before it bought back rights to its Quicken/QuickBooks products.

While plentyhas changed at Reckon in the past decade, although it’s still been chuggingalong as a $30-odd million a year business at the EBITDA line. Fund managersMicroequities and Spheria are among its biggest investors, after Novatti.