Warburg Pincus to buy Germany's PSI for over 700 million euros

(Reuters) -Private equity firm Warburg Pincus has struck a deal to buy Germany's PSI Software for more than 700 million euros ($811 million), with shareholder and customer E.ON remaining a strategic investor, the firms said on Monday. Reuters first reported on both a nearing takeover of PSI last week and Warburg Pincus' offer for the maker of software for energy networks on Sunday. Having jumped nearly 11% on Friday after the news broke, PSI shares gained a further 35% to trade at 44.9 euros apiece – their highest level since January 2022. That was close to the offered price of 45 euros per share in Warburg Pincus' deal, amounting to a premium of about 50% from the company's closing price on Thursday. MANAGEMENT STRUCTURE, BERLIN HQ, TO BE MAINTAINED PSI's software helps run power and gas transmission grids, the backbone of energy infrastructure, as well as factories, and Reuters has reported that it was seeking funding for the development of product upgrades. Last year, the group was hobbled for weeks by a cyberattack that forced it to take most of its IT systems offline, exposing the vulnerability of software supply in critical infrastructure. As a result, PSI posted an annual loss before interest and taxes of 15.2 million euros ($17.6 million) in 2024. PSI said its board supported the suitor's offer and intends to recommend it to its shareholders. PSI plans to delist from the German stock exchange after the closing of the deal. PSI added that Warburg Pincus would maintain the company's management structure and its headquarters in Berlin. E.ON STAYS A KEY SHAREHOLDER "With our deep experience in software and energy, as well as a strong track record in take-private transactions, we believe Warburg Pincus is the right partner to support the next phase of PSI's growth," Warburg Pincus managing directors Max Fowinkel and Ryan Dalton said in a statement. Warburg Pincus has signed agreements for about 28.5% of PSI's equity with its anchor shareholders, PSI said. The statement said that an unnamed anchor shareholder will partially reinvest its proceeds alongside Warburg Pincus into PSI's holding structure. German businessman and newsletter publisher Norman Rentrop is PSI's largest shareholder with a 23% stake, while German utility E.ON, Europe's largest operator of energy networks, is its second-largest investor with around 18%. For the purpose of the transaction, E.ON will be regarded as acting jointly with Warburg Pincus, the firms said. Goldman Sachs is running the sale process. ($1 = 0.8607 euros) (Reporting by Rishabh Jaiswal, Shubham Kalia and Disha Mishra in Bengaluru, Alexander Huebner in Munich and Christoph Steitz and Ludwig Burger in Frankfurt; Editing by Thomas Derpinghaus, Aidan Lewis and Bernadette Baum)

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