Industrial conglomerate Koch Industries announced it will spend more than $2 billion to take a majority stake in enterprise software developer Infor on Wednesday.
The investment was made by Koch Equity Development LLC, a subsidiary of the company that seeks to invest some of its excess cash into new opportunities. It also marks the company’s first major foray into the tech world.
Infor already counted Koch Industries subsidiary Georgia Pacific as a customer, so there was some familiarity there. It offers specialty software licenses to specific sectors.
Koch Industries is the second-largest privately held corporation in the United States with annual revenue of more than $100 billion. It owns brands such as Brawny paper towels, Dixie Cups, and Lycra, as well as oil refineries and other energy assets. It is very much an old economy company.
What’s interesting about this deal is the level of involvement from the top. Charles Koch, the 81-year-old CEO of the close-knit company, was reportedly very involved in the deal, including meeting with Infor’s CEO on three separate occasions.
Koch firmly believes his company needs to start shifting its focus towards the tech sector. If Koch Industries shift towards tech in a big way, it could greatly impact the sector. After all, it has a lot of money to throw around.
A Canadian company that may be attractive to Koch Industries is DH Corp (TSX:DH), the software provider for many banks and other financial institutions. It has a dominant market share in Canada, and Koch could easily swallow the debt that is threatening the company’s generous dividend.
