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More MBOs and bids on the way

Hot on the heels of the latest CSG deal, we have two more announcements of changes (an MBO at MessageLabs) or at least potential changes (a bid for Civica) within the legal technology space.

The MessageLabs Group has announced that Star Technology
Services one of the UK’s largest independent business-to-business
Internet Services Providers (ISP), will separate from the Group by way
of a sale to its management team led by Ben White, the business’s
founder and Chief Executive Officer. Terms of the deal were not
Star Technology Services will now operate independently under the
management team already in place. As well as CEO of the newly separated
Star, Ben White will also retain his role as Chief Strategy Officer of
MessageLabs and Vice Chairman of the Board.

For its financial year ended July 2006 MessageLabs Group reported
revenue of £91.2m ($173m) representing an increase of 23% over the
previous year. This comprised of £45.8 million ($87 million) in revenue
for Star and £49.7 million ($94.4 million) for MessageLabs. MessageLabs
is now extending its profitability and has steadily increased its
service offerings, global presence and leadership position; 2006
represented its fifth consecutive year of annual growth in excess of
thirty-five percent.

“MessageLabs Group’s decision to separate sister companies Star and
MessageLabs will enable both companies to focus independently and more
strategically on future growth. The sale of Star should also provide
additional funding for MessageLabs continued expansion beyond email
security,” said David Morrison, Chairman of MessageLabs Group. “I am
confident that both MessageLabs and Star have very exciting futures
ahead of them.”

And Civica – at one time a major player in the legal PMS and case management systems arena through its Galaxy Legal range – has announced that it received an unsolicited preliminary approach from a private equity fund. Discussions are at an early stage and this approach may or may not lead to an offer being made for the Company. There can be no certainty that an offer will be made. A further announcement will be made in due course.  Shareholders are advised to take no action at this stage.

Civica has also published its trading figures for the 6 months to 31st March 2007. Turnover increased 11 per cent to £62.8 million. Operating profit before amortisation, exceptional items and Long Term Incentive Plan charges rose to £9.0 million, which represents an increase of 15 per cent over the same period for the previous year. The proportion of revenues derived from owned software related activities has continued to increase in line with group strategy. Turnover from these activities was up by 33 per cent during the period supporting a growth in gross margin percentage to 62.9 per cent (2006: 51.4 per cent) and an increase in operating profit margin to 14.3 per cent (2006: 13.8 per cent). Basic earnings per share grew to 9.6 pence. The statutory operating profit was £2.4 million (2006: operating loss £1.4 million).