Fortive, the Everett, Washington-based maker of a variety of industrial solutions including test and measurement technology, said Monday it will buy privately held ServiceChannel of New York City, which makes cloud software for facilities management, for $1.2 billion in cash.
Fortive also said its revenue in the June quarter had risen faster than it had previously forecast. Fortive shares were unchanged in late trading at $70.45.
Said Fortive CEO James A. Lico, ServiceChannel "fits extremely well alongside Accruent and Gordian," referring to Fortive software programs for facilities management, and construction cost estimation, respectively.
The ServiceChannel software will "broaden our offering of software-enabled solutions for the Facility and Asset Lifecycle workflow," he said.
Lico called the deal "another great example of how we continue to use disciplined capital deployment to accelerate our long-term strategy across our segments."
Added Lico, "The Company's high-growth SaaS platform, leading contractor network, rich data assets, and existing global footprint will add significantly to the long-term growth and profitability of IOS."
ServiceChannel, founded in 1999, has received $70 million in seven rounds of funding, with the majority coming from Silicon Valley venture capital firm Accel Partners.
ServiceChannel is expected to have $125 million in revenue this year, ergo, the deal values the company at just under ten times projected revenue.
A call will be held tomorrow morning, 8:30 am, Eastern time, to discuss the deal.
Fortive said that for its Q2 ending in June, its "core" revenue will rise by 20%, which is above the forecast for core revenue growth of 16% to 19% offered back on April 29th.
Total revenue is expected to rise 25%. That figure does not match the Wall Street consensus, as Fortive excludes from its year-over-year comparison the historical results of Vontier, a publicly traded company that was spun out of Fortive last year in a stock distribution to Fortive shareholders.
Said Lico of the results, "We are incredibly proud of the strength that we demonstrated in Q2.
"These preliminary results, along with the acquisition of a high-quality company like ServiceChannel, puts us in a great position for the remainder of 2021 and 2022."
Fortive will hold its formal quarterly conference call to discuss results on July 29, after market close.