A Scottish cloud computing specialist has moved to acquire an English rival for £4 million.
Glasgow-based iomart said it has agreed to acquire the entire issued share capital of Extrinsica Global Holdings Limited, the Oxford-based Microsoft Azure Cloud solution services provider.
The acquisition provides iomart with greater Microsoft Azure expertise through a team of 33 based in the UK.
Simon Smith, chief executive and co-founder of Extrinsica, will continue to lead the business with his team, while from a legal, financial and governance perspective, they will be part of the iomart Group.
Reece Donovan, chief executive of iomart Group, which has around 400 employees in total with 160 in Glasgow, said the firm is “delighted to welcome the Extrinsica team ... providing a large step forward in iomart's capabilities to support existing and new customers in their use of Microsoft's Azure cloud platform”.
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He said: “Simon and the team have been at the forefront of the market developments of Azure since 2017 and have deep skills and expertise in this in-demand area of cloud computing, which will accelerate the initial investments we have made in our own Microsoft resources and capabilities.
“This is a meaningful step in our strategy as we position the group for its next phase of growth as a leading secure hybrid cloud business."
Mr Smith said: “Joining iomart marks an exciting phase for our highly skilled, experienced and ambitious team, providing us with a strengthened platform for growth. It allows us to leverage joint capabilities, capitalise on our understanding of the markets we operate in and build upon our significant achievements to date.
“Iomart has a long pedigree in cloud infrastructure, an impressive customer base and a growth strategy which I believe positions iomart well for future success."
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For the year ended March 31, 2023, Extrinsica generated revenues of £7.4m, which showed year-on-year growth of 40%, and Ebitda of £100,000.
The initial consideration for the acquisition is £4m, with a potential further £300,000 in cash payable on the achievement of key customer targets.
Of the initial consideration, £2m will be satisfied by the issue of 1.56 million new ordinary shares in iomart, which are subject to a 12 month "lock in" provision and based on a fixed share price of £1.28, being the volume weighted average price for the 90 days prior to completion.
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The balance of £2m will be paid in cash and iomart will also repay £3.7m of debt acquired on completion.
The agreement also includes a further £4m to £7m of contingent earn-out payments which are calculated based on Extrinsica's profitability for the 12 months ending March 31, 2024. Of any earn-out payment that becomes due, £1m will be satisfied by the issue of iomart shares.
It said that “the amount of contingent consideration payable, based on management's forecast, recognised at the date of the acquisition, is expected to be £4m”.
Shares in iomart closed up 2.99%, or 5p, at 172p.
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