Although not well known in the United States as a library automation company, Civica ranks globally as one of the largest companies that provide software to libraries. Although based in the United Kingdom, Civica currently has its largest base of library customers in Australia. It has a growing presence among UK libraries, however, with only a small handful of library clients in the United States. Civica's Spydus automation system has been adopted by libraries in many regions of the globe. The company and its antecedents have been involved in library automation for almost 30 years.
3i After AIM
Civica, a large software and services company that includes a library division offering the Spydus automation system, has undergone a business transition where it changes from a publicly traded company on the London-based AIM exchange to a private company, primarily owned by 3i Investors, a major private equity firm. 3i is a very large private equity firm with £5.6 billion (approximately $11 billion) in market capitalization. The company operates in 14 countries, and follows a policy of socially responsible investments, stating “respect for human rights is central to good corporate citizenship.” This transition has not been characterized as a hostile buy-out, but rather as a mutually agreeable arrangement that will provide the company a stronger financial position for future growth and business development than was possible as a public company.
Civica traces its business history through a complex course of antecedent companies. Its latest era began on March 1, 2004 through its flotation on the AIM, a segment of the London Stock Exchange for smaller companies early in their business cycle, involving higher investment risk. Readers may recall that Ex Libris attempted a flotation on AIM in September 2005, but failed to generate the valuation expected by its investors. Ex Libris quickly moved on to a buy-out by Francisco Partners, a large private equity firm. When Civica Plc began trading on the London AIM exchange, it raised £15 million (approximately $29.6 million) of new capital and was valued at £79.2 million (approximately $156.4 million).
Civica's 4-year tenure on AIM was fairly short-lived, primarily due to the inability of its stock price to hold at a level that would supply it with a sufficient level of capital to fulfill the company's business ambitions. Following its initial offering at 175 pence in March 2004, the price climbed through the beginning of 2007 peaking at about 280p. The price fell to about 165p in December 2007, rising to and holding at about 200 through the first quarter of 2008. The sale price of 270p represents a substantial premium to the stockholders as 3i acquires the company.
As a portfolio company of 3i, Civica will gain access to substantial capital for its business development and will operate more efficiently without the reporting and regulatory overhead required of public companies. Part of the company's strategy going forward involves organic growth through continued sales to new clients as well as expansion through business acquisitions. Under the ownership of 3i Investments, the company will have access to the financial resources it needs to execute this strategy.
The existing management team will remain in place and no major changes are planned for its operations. The transition of Civica follows a pattern similar to Geac's acquisition by Golden Gate Capital, another public to private conversion. Like Geac, the business unit involved with library automation represents a relatively small portion of the company's overall activities. Private equity firms also own SirsiDynix and Ex Libris.
Civica offers a number of products for public agencies. According to Peter Anderson, Managing Director of Civica International, the library automation division represents about 15 percent of the company's overall activities.
The Transition Process
The purchase of Civica involves the procurement of all outstanding stock through an offer put forward by Cornwall Bidco, a company controlled by 3i and formed specifically for the purpose of this acquisition.
As of April 18, 2008, sufficient shares had been purchased by Cornwall Bidco to allow for the de-listing of the company on AIM. Following the completion of the transaction, 3i will own the majority of the company, with company executives owning a minority share. The value of the transaction was about $380 million or £190 million.
Private equity firms hold onto their portfolio companies for a finite period. We can expect 3i Investors to maintain ownership of Civica for the next three to five years.
A Privatization Trend
The transition of Civica from a public company to one under the ownership of a private equity firm reflects the realities of the current economy in which the library automation industry resides. In a highly competitive market fueled primarily by non-profit organizations, such as libraries, companies need flexibility and efficiencies that are difficult to achieve by publicly traded companies. In recent months Canadian-based Isacsoft made its transition from the Toronto Stock Exchange to private ownership by its founder. Auto-graphics, though still technically a public company, de-listed itself, following rules allowable for small companies not actively traded, to simplify its administration. Private equity has increasingly become the dominant ownership model for the companies involved in the library automation industry. Civica joins the club that also includes SirsiDynix, Ex Libris, and Infor.
Civica traces its corporate history through a fairly complex path of antecedent companies. As we trace our way back through the company and product names involved, it becomes clear that Civica carries forward a library automation business with some of the deepest roots in the industry. One of the key companies involved in Civica's past is Sanderson Group, a large and complex company offering software and services to a wide variety of business sectors. Sanderson Electronics was a UK company founded in 1983 by Paul Thompson, who served as its chairman until 2000.
In 2000, the company went through a major transition in the form of a management buy-out. Founder Paul Thompson sold his shares and exited the company. Prior to this time, Sanderson Group was a public company, heavily involved in business acquisitions. The company had as many as 23 business units. Beginning in 2001, the company began simplifying its structure, consolidating its business units. An operating group was formed within Sanderson through the consolidation of several public sector businesses, which became Civica in 2003.
In December 2003 Sanderson Group was split into three companies, each specializing in a specific set of business activities.
- Sanderson. One part of the company retained the Sanderson name, focusing on the retail and manufacturing sectors. Its products address e-commerce, mail order and fulfillment, and wholesale distribution.
- Talgentra specializes in enterprise billing and customer management software for public utilities such as energy, water, and airports. The company offers software products for utility billing, for managing data from meter readings, and Airport 20/20 airport information management. The company also offers ServicePoint, a self-check kiosk for libraries.
- Civica includes the part of the business involving consultancy, software, and managed services for local governments and libraries. Civica offers a variety of products and services for the public sector. In addition to the Spydus library automation system, Civica develops software for law enforcement, local government, education, and healthcare.
Spydus, the automation system offered by Civica, continues today following a long and tangled history. Spydus stands as the last strain of the Urica library automation system, originally produced in South Africa, which was developed and marketed in several parts of the world through the independent efforts of multiple companies.
Urica was originally developed in the late 1970's. The software was marketed by Urica Integrated Systems, and found considerable success with public and academic libraries in South Africa. In 1998, Urica Integrated Systems merged with a company that offered the competing Erudite library automation system to form a company called Universal Knowledge Software, or UKS. This version of Urica eventually slipped into obsolescence. UKS became a distributor of Unicorn for Sirsi Corporation in 2005. Many of the libraries operating the South African version of Urica have since moved to other systems such as Millennium and Unicorn.
Urica was offered in the United Kingdom by McDonnell-Douglas Information Systems (MDIS). The system prospered, with about 35 UK libraries adopting this version of Urica. As this version reached the end of its lifespan, MDIS began creating a next-generation client server system called LION. About this time, the company began experiencing financial difficulties and the next generation system did not materialize. Support of the UK version of Urica was acquired by Ameritech, the US telecommunications company, that was just beginning its foray into library automation that eventually played out with its acquisition of NOTIS and Dynix to form the Ameritech Library Services division. Ameritech also acquired the support of other automation systems at the end of their life-cycles, including LS/2000 from OCLC Local Systems.
The Australian version of Urica began in 1979 when a division of Amalgamated Wireless Australasia, Ltd. (AWA Computers), a major computer services company in Australia, licensed the Urica software from its original developers in South Africa. AWA Computers saw Urica as the best system available to provide a circulation and cataloging system for the University of Tasmania. To satisfy the needs of this project, the software was further developed and enhanced, in collaboration with the staff of the University of Tasmania. In 1989, AWA Computers was acquired by UK-based Sanderson Computers.
Though the 1980s and beyond, this version of the software prospered as the most successful automation system in Australia.
Unlike the other strains of Urica, the Australian version successfully evolved through transitions in computing platforms. Urica was ported from Pick to Unix in about 1991. The system saw continued development and increasing adoption by libraries throughout the region. In 1999, Sanderson renamed Urica to Spydus. Beginning in 1985 Urica was marketed throughout Asia. Top Information Technologies became distributor of Urica for Taiwan at this time, and has found a strong market for the product, especially among public libraries. About two-thirds of public libraries in Taiwan use Spydus today as well as about a third of the major academic libraries. Top Information Technologies also offers ALEPH 500 and other products from Ex Libris, and its own Torica library automation system.
To add yet another wrinkle to the story, General Automation, Inc., another company intertwined with Sanderson, licensed Urica for distribution in the United States beginning in 1993 under the name Zebra 2000. General Automation manufactured computer systems and offered software applications based on Pick. The company did not find a large degree of success in marketing Zebra 2000. On August 28, 1995 General Automation entered into an agreement where sales and support reverted back to Sanderson Computers, Inc.
Despite being based in the UK, the largest portion of Civica's library automation business lies in Australia and Asia. Civica began marketing Spydus in the UK beginning in 2005. Since its introduction, Spydus has been adopted by 12 public library authorities in the UK representing 202 local libraries. In these last three years, Spydus has seen a strong rate of adoption in the UK.
One of the Civica's largest recent contracts involves school libraries in Singapore. In 2005 the Singapore Ministry of Education awarded Civica a major contract to provide library services for its 352 libraries—including both software and personnel. Civica reported that it completed the implementation of this project in June 2007, 16 months ahead of schedule.
In February 2008 the division of Civica involved with Spydus was renamed to “Library and Learning” with Philip Barr named as its Managing Director. Barr has managed the Spydus product globally since 2002. The change in the name of the division reflects its increased involvement with educational institutions, such as its contract with Singapore. An important part of Civica's business strategy involves Software as a Service, which it markets as Managed Service. The company indicates that about 1,500 libraries worldwide use Spydus. About 680 of these libraries have adopted Managed Service rather than the locally installed version.
A North American Presence
Civica currently has a very small presence among libraries in the United States, with only five installations to date. Most of these libraries use Spydus Managed Service. Previous efforts to market Urica/Spydus have produced minimal results, but the company now seems intent on playing a larger role in the North American library automation scene. Civica has been represented in the United States for at least twenty years by its wholly owned subsidiary based in Englewood, Ohio, named Creative Microsystems, Inc. CMI was originally part of Sanderson, and went by the name Sanderson CMI. In 2003, CMI became part of Civica, focused especially on managed services for local governments.
In December 2007 CMI began marketing Spydus to libraries in North America, launching a sales and support office. As the ILS options have narrowed in recent years, the entry of a new system may find a warm reception by some libraries. The demand for new automation systems among US public libraries is strong among small libraries moving away from PC-based systems, as well as some lingering legacy migrations. In addition, a large number of libraries using Horizon are weighing their options. Many will seek products from commercial competitors as well as open source alternatives.
Should Civica carry out its stated goal to expand through acquisition, it may make a more dramatic entrance to the US automation market. Whether it happens through winning new sales or through an acquisition of or partnership with an existing company, Civica is a company to watch and is one that may soon become more familiar to librarians in the United States.