By Anastasia Malikova, Shir Lyn Lau, Hunter Pang (LSE); Edward Fung
Freya Zhang, Harry Yum (HKUST)
Photo: Shutterstock
Overview of the deal
Acquirer: World Wide Technology (WWT)
Target: Softchoice Corporation
Implied Equity Value: -
Total Transaction Size: $1.25bn
Closed date: Late Q1 or early Q2 (expected)
Target advisors:
Financial: TD Securities (lead), RBC (co-lead), Origin (independent advisor to the Board)
Legal: Stikeman Elliott LLP
Acquirer advisors:
Financial: BDT & MSD, BofA Securities
Legal: Blake, Cassels & Graydon LLP, Bryan Cave Leighton Paisner LLP
WWT’s acquisition of Softchoice strengthens its cloud, software licensing, and IT asset management capabilities, enhancing its position in the North American technology services market. The deal also expands WWT’s expertise in artificial intelligence (AI), cybersecurity, and digital transformation solutions. By acquiring Softchoice, WWT gains access to its well-established relationships with key technology vendors, further improving market reach and service offerings.
For Softchoice, the acquisition provides access to WWT’s extensive customer base, global scale, and infrastructure solutions, complementing its software and cloud-focused business. The combined entity is expected to deliver enhanced digital solutions to clients, driving operational efficiencies and fostering innovation.
The deal will be executed through a statutory plan of arrangement under the Canada Business Corporations Act and is subject to shareholder approval, regulatory clearance, and court approval. A termination fee of C$49 million would be payable by Softchoice under certain circumstances, such as accepting a superior offer.
“Softchoice has been a transformative player in the IT industry for over 35 years, and adding its complementary software, cloud, cybersecurity and AI capabilities to WWT’s portfolio will enable us to create even greater value for our clients striving to achieve their digital transformation goals.” - Jim Kavanaugh, WWT Co-Founder and Chief Executive Officer
Company Details (Acquirer - WorldWide Technology)
Founded in 1990, World Wide Technology, Inc. (WWT) is a global technology solutions provider specializing in digital transformation, cloud computing, infrastructure solutions, supply chain optimization, and cybersecurity services.
The company generates over $20 billion in annual revenue and manages a vast network of technology partnerships and integration centers worldwide. Its technical and professional workforce includes more than 10,000 employees globally.
WWT partners with major technology firms, including Cisco, Dell Technologies, Intel, NVIDIA, and HPE, and is recognized for its Advanced Technology Center (ATC) platform, which serves as a collaborative ecosystem for testing and validating enterprise technology solutions. The company consistently ranks among the largest privately-held companies in the United States and serves clients across government, healthcare, financial services, and telecommunications sectors.
Founded in 1990, headquartered in Missouri, USA
CEO: Jim Kavanaugh
Number of employees: 10,000
Market Cap: N/A
EV: N/A
LTM Revenue: N/A
LTM EBITDA: N/A
LTM EV/Revenue: N/A
LTM EV/EBITDA: N/A
Recent Transactions: Acquisition of Performance Technology Group (Jan 2010) (undisclosed amount)
Company Details (Target - Softchoice)
Founded in 1989, Softchoice (TSX: SFTC) is a leading North American technology solutions provider specializing in cloud and data center integration, digital workplace collaboration, IT asset management, security, and network solutions.
The company manages 30,000 software, cloud, and services agreements, along with 8.5 million M365 bundled suites. Its technical and sales team includes over 800 sales professionals and 750 technical resources, with more than 1,800 certifications in key areas.
Softchoice partners with major technology firms like Microsoft, Cisco, Google, and VMware, and is recognized as the number one Microsoft cloud deployment and Azure partner.
Founded in 1989, headquartered in Toronto, Canada
CEO: Andrew Caprara
Number of employees: 2,100+
Market Cap: $1.04bn (as of 14/02/2025)
EV: $1.25bn
LTM Revenue: $770.0mn
LTM EBITDA: $83.8mn
LTM EV/Revenue: 1.3x
LTM EV/EBITDA: 12.4x
Projections and Assumptions
Short-Term Consequences
Firstly, Softchoice shareholders will receive an all-cash payment of C$24.50 per share, providing them immediate liquidity and certainty of value. With no financing conditions and aligned corporate cultures, there is minimal risk of deal failure. Furthermore, the acquisition is expected to be accretive within the first year.
For WWT, the deal will expand its solutions portfolio, strengthening its software, cloud, cybersecurity, and AI offerings. The companies’ portfolios are highly complementary - WWT can offer Softchoice's software and cloud solutions to its clients, while Softchoice’s customers gain access to WWT’s infrastructure solutions. Integrating Softchoice’s expertise in cloud management and software licensing will enable WWT to provide a more comprehensive suite of solutions and advance its AI ambitions. However, WWT may face short-term challenges in merging IT systems and integrating Softchoice’s products into its portfolio.
In addition to the potential cost savings and operational efficiencies from streamlining overlapping operations, the acquisition will enhance customer experience by creating a one-stop shop for technology solutions. It will also broaden WWT's geographical reach — Softchoice has a dominant foothold in the North American small and medium-sized business segment (middle market), while WWT primarily serves larger-scale institutions globally and within the U.S. enterprise market. This acquisition is poised to facilitate WWT’s expansion in the North American region, where Softchoice has established strong customer service connections and a robust reputation, adding Softchoice’s 5,000+ small and medium-sized business clients to WWT’s global customer base.
Overall, within the first year, WWT will experience a strengthened market position, enhanced service offerings, and immediate liquidity for its shareholders.
Long-Term Upsides
This acquisition aligns with WWT’s long-term strategic focus on AI transformation by establishing a comprehensive AI ecosystem. Softchoice’s expertise in cloud services and SaaS will enable WWT to transition from primarily serving enterprise clients to becoming a more holistic provider of end-to-end IT solutions, particularly in the domains of cloud computing, digital workplace collaboration, and software management offerings (SaaS) within the middle market segment over the long term.
In support of this strategic direction, the acquisition positions WWT to capitalize on the growing cloud professional services market in North America, which is forecasted to expand from USD 9.4 billion in 2024 to USD 32.5 billion in 2032 at a CAGR of 16.8%. This growth is primarily driven by the integration of advanced technologies, such as artificial intelligence, which increases the demand for specialized cloud services for effective implementation and optimization. The combined company will be well-equipped to meet this demand.
Moreover, the acquisition facilitates the development of recurring revenue streams. According to Softchoice's earnings results, approximately 80% of revenues are driven by cloud service subscriptions and on-premises cloud service licensing, with an average customer tenure of 10 years, 98% retention for broader IT solutions, and a 104% revenue retention rate over the past five years. Subscription-based fee models offer a buffer against market fluctuations. By acquiring Softchoice, WWT can reduce its reliance on project-based revenue and increase its share of recurring income. This resulting stability in cash flow could create a capital buffer for clients during seasonal fluctuations in IT budgeting, enhancing WWT’s resilience to market uncertainties and establishing more predictable revenue streams.
Risks and Uncertainties
Regarding integration risk, merging two companies with distinct operational focuses - WWT's emphasis on infrastructure solutions and Softchoice's software-first approach - presents several challenges. These challenges include aligning different corporate cultures and operational methodologies. However, both organizations share a strong commitment to innovation and inclusion, which can facilitate a smoother integration process.
From a regulatory standpoint, the transaction, implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act, is subject to court approval and customary closing conditions. Additionally, cross-border legal complexities, including compliance with both Canadian and U.S. regulations, may further complicate the process.
In terms of shareholder approval, the acquisition requires a two-thirds majority of shareholder votes (66.7%). Although 51.3% of shareholders, represented by Birch Hill Equity Partners, the largest shareholder of Softchoice, as well as each of the directors and senior officers of Softchoice, have expressed their support, the remaining votes are uncertain. If key shareholders oppose the deal, it may not secure the necessary approval to proceed.
Finally, regarding the competitive landscape, the agreement includes a C$49 million termination fee should Softchoice receive a superior proposal before closing. This clause introduces uncertainty regarding whether WWT will ultimately secure the acquisition or face competition that could derail the deal.
“We are excited to join WWT. Its scale and global reach, customer base of large organizations, and industry leading infrastructure solutions are a perfect complement to our software and cloud focused solutions, our Canadian presence, and our strength in the North American mid-market.” - Andrew Caprara, Softchoice President and Chief Executive Officer