Gemcom taken out by private equity firms for $180M

VANCOUVER–In a commodity supercycle, it pays to remember that mining companies don’t go it alone. Without support and supplies from a whole range of companies, from equipment manufacturers to architects, a discovery would remain just that — potential pounds in the ground.

One of the latest takeovers shows just how much it can pay to keep these supporting players in mind. Gemcom Software International (GCM-T, GEMCF-O), arguably the world’s leading provider of mining software, has just agreed to be taken out by JMI Equity and the Carlyle Group in an all-cash transaction valued at roughly $180 million.

Gemcom shareholders will receive $2.90 in cash for each share, representing a 16% premium over Gemcom’s weighted average closing price for the last 45 trading days prior to the offer. For long-term shareholders the deal marks the culmination of a steady climbing trend: Gemcom has gained 180% in the last year and a half, rising to its current price around $2.80 from $1 in late 2006.

News of the takeover deal boosted Gemcom shares 26 to a new high of $3.06 on a record 5 million trades. The company has 53.8 million shares issued.

Gemcom’s mining software spans exploration through produc- tion. It has programs to model and interpret deposits, develop and optimize mine plans, schedule production, and continuously gather and analyze key operational data to ensure consistent output. Key programs include GEMS, Surpac, Minex, Whittle, and MineSched.

In 2006 Gemcom acquired Surpac Mining Group, a competitor with a dominant market position in Australia — the world’s largest mining software market — and stronger ties into Chinese and Russian markets. The takeover left Gemcom with close to 300 staff in 20 offices worldwide.

Gemcom’s client list includes every major mining company: BHP Billiton (BHP-N, BLT-L), Codelco, De Beers, Newmont Mining (NMC-T, NEM-N), and Vale (RIO-N) all rely on Gemcom software and support. The company has a presence in all major mining centres — its clients are at work in more than 90 countries.

The company’s soon-to-be owners are both private equity firms. JMI Equity invests exclusively in growing software and business services companies in North America. Founded in 1992 and based out of Baltimore, Md., and San Diego, Calif., JMI has partnered with more than 90 such companies and has some US$1.3 billion of committed capital under management.

The Carlyle Group is one of the world’s largest private equity firms, managing some US$81.1 billion under 60 funds across four investment disciplines: buyouts, venture and growth capital, real estate and leverage finance. The firm is at work in more than 20 countries; Carlyle Group companies combined have more than $87 billion in revenue and employ 286,000 people.

Gemcom’s board of directors has approved the agreement and unanimously resolved to recommend it to shareholders. In addition, each of Gemcom’s directors, its CEO, and chief financial and technical officers have signed voting agreements ensuring their support.