The two leaders in capital asset AEC settle a lawsuit, again. Is Bentley now worth $670 million? $1.2 billion?
Bentley Systems and Intergraph, competing specialists in engineering/design software for capital asset AEC, have settled an eight-year lawsuit. The meager details released provide a glimpse of the value of privately held Bentley and its tangled history with Intergraph.
According to court documents, an entity called Cobalt BSI Holding will sell back to Bentley its 15.6 million shares of Bentley stock, at a purchase price of just over $12 per share, totaling about $198 million. Of that total, $9 million will go to Cobalt lawyers in Huntsville, Alabama. Huntsville is home to Intergraph and the court hosting the lawsuit.
Cobalt BSI Holdings is a spinoff of the original private ownership group that acquired Intergraph in 2006 and took it private. In July 2010, Sweden-based Hexagon AB bought Intergraph for $2.1 billion. At the time, we wondered what Hexagon might do with its Bentley stock, but this settlement reveals the Bentley stock was not part of the Intergraph acquisition.
The current legal tiff began in 2002 with Intergraph challenging how much Bentley owed on a promissory note and Bentley countersuing about Intergraph’s handling of maintenance contracts.
Settlement terms include an agreement to not issue press releases or otherwise discuss the case in public. The two have a long history of litigation going back to the 1980s when the Bentley brothers created a microcomputer version of Intergraph’s CAD software which Intergraph then distributed. By our count, the litigation score from 1986 to 2011 is Bentley 10, Intergraph 0.
Playing with the numbers
For years it has been generally known that Intergraph owned 33% of Bentley, dating back to 1987 with an original investment that was at the time for 50% of the company. Subsequent secondary issues of stock lowered the Intergraph ownership percentage over the years.
This is the second time Intergraph (or a successor) has returned stock to Bentley. In 1999 Intergraph gave back 3,000,000 shares of Bentley stock in a complicated settlement to a previous lawsuit. That makes a total of 18,600,000 shares of Bentley stock formerly held by Intergraph.
At today’s settlement price of $12, and if these shares truly represent 33% of outstanding Bentley stock, $12 x 18.6 million = $223.2 million and $223 million x 3 = $669.6 million. A market capitalization of $669 million seems low for a company that is likely to report 2010 annual revenue in the neighborhood of $550 million. If the Exton, Pennsylvania company were to sell itself today, a much more likely price would be 2.2 times earnings, or $1.21 billion.