PROACTIS Holdings PLC Acquisition of Intesource Inc (7070F)

TIDMPHD

RNS Number : 7070F

PROACTIS Holdings PLC

29 April 2014

 
 Date:              29 April 2014 
 On behalf of:      PROACTIS Holdings PLC ("PROACTIS" the "Company" 
                     or "the Group") 
 Embargoed until:   0700hrs

PROACTIS Holdings PLC

Acquisition of Intesource Inc

PROACTIS Holdings PLC ("PROACTIS", the "Company" or "the Group), the specialist Spend Control software provider, is pleased to announce that it has entered into an agreement to acquire the entire issued and to be issued share capital of Intesource Inc ("Intesource") for $3.9 million, payable in cash on completion ("the Acquisition"). The net cash consideration is expected to be approximately $2.9 million as Intesource is expected to have approximately $1.0 million of cash at completion.

Highlights

-- Intesource will increase the Group's scale and profitability, and provide a substantial footprint and expertise in the US market

-- The Acquisition brings a Gartner recognised expert reverse e-auction offering, delivered as true Software as a Service, which is complementary to the Group's existing service and software suite

-- Over 25 new clients and significant scope for cross-selling opportunities

-- Clients follow a subscription based business model with, typically, 2 to 4 year term contracts

-- Annual recurring revenue to be acquired as part of the Acquisition is anticipated to be in excess of $4.5 milllion

Information on Intesource

Intesource is an established provider of e-auction services (using its own proprietary service delivery know-how and software platform) and has more than 25 clients delivering over $4.5 million of recurring annual income profitably. The service offering was recognised by Gartner which classified Intesource as a "cool vendor" list in its report during May 2013.

The Directors believe that the Acquisition will provide further scale and profitability and offers strong opportunities to cross-sell its own complementary product suite. In addition, operational savings are expected through the consolidation of elements of its existing operations in the United States. Intesource's current e-auction service delivery know-how and the software platform significantly bolsters PROACTIS's offering, by accelerating the service offering to clients and saving forward development costs.

Customers of both PROACTIS and Intesource can look forward to the delivery of broadened services and solutions to support operations, enhance procurement effectiveness and extend collaboration with suppliers. In addition, Intesource's customers will now have access to truly "end-to-end" procurement solutions from the PROACTIS Group.

For the year ended 31 December 2013, the audited accounts of Intesource showed turnover of $5,026,000 on which it made an operating profit of $610,000. Gross assets at that date were $2,889,000.

Further information on the Acquisition

Upon completion of the Acquisition, PROACTIS will issue new ordinary shares of 10p each in the capital of the Company ("Ordinary Shares") to the value of approximately $0.4 million to certain key employees of Intesource to settle Intesource's bonus obligations to them. These Ordinary shares will be subject to lock-in conditions over a period of one year from completion.

Completion of the Acquisition is conditional principally upon consents, approvals and agreements with certain customers, suppliers and stakeholders of Intesource and confirmatory certificates from the appropriate regulatory authorities in the United States being received. Completion of the Acquisition is expected to occur within a period of up to six weeks from today, assuming that there is no material adverse affect to Intesource's financial position and performance over that time.

The Group will fund the Acquisition from its own cash resources.

A further update will be made as and when required.

Rod Jones, CEO commented:

"Intesource is an excellent strategic fit for PROACTIS, and marks a significant step in the Group's growth strategy through the provision of increased scale, profitability and further growth opportunities. In addition the Group will benefit from synergies with its existing US operations.

"The acquisition widens our breadth of offering with an expert service delivery capability from a Gartner recognised "cool vendor". The depth of experience and software capability provided by Intesource bolsters the Group's existing strong offering, and reflects the increasing need of our customers for e-auction services. We are now in a strong position to begin delivering these services to clients immediately and look forward to updating the market on our progress in due course."

Enquiries:

 
 PROACTIS Holdings PLC 
 Rod Jones, Chief Executive Officer     Via Redleaf Polhill 
  Tim Sykes, Chief Financial Officer 
 Redleaf Polhill 
 Rebecca Sanders-Hewett 
  Jenny Bahr 
  Rachael Brown                         0207 382 4730 
 
 finnCap Limited 
  Stuart Andrews 
  Charlotte Stranner                    0207 220 0500

Notes to Editors:

PROACTIS creates, sells and maintains specialist software which enables organisations to streamline, control and monitor all internal and external expenditure, other than payroll. PROACTIS is used in over 300 organisations around the world from the commercial, public and not-for-profit sectors.

PROACTIS is head quartered in Wetherby, West Yorkshire. It develops its own software using an in-house team of developers and sells through both direct and indirect channels via a number of Accredited Channel Partners.

PROACTIS floated on the AIM market of the London Stock Exchange in June 2006.

CLOUD COMPUTING is defined as location-independent computing, whereby shared servers provide resources, software, and data to computers and other devices on demand, as with the electricity grid.

This information is provided by RNS

The company news service from the London Stock Exchange

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