TIDMSQS
RNS Number : 7726L
SQS Software Quality Systems AG
30 April 2015
30 April 2015
SQS Software Quality Systems AG
("SQS" or the "Company")
Acquisition of Trissential LLC ("Trissential")
SQS Software Quality Systems AG (AIM:SQS.L), the world's largest
supplier of software quality services, announces that it has
conditionally agreed to acquire the entire issued share capital of
Trissential LLC. for a maximum consideration of $30.7 million (the
"Acquisition"). The Acquisition consideration will be satisfied
through a combination of existing cash, a new credit facility and
new SQS shares.
Trissential is a leading IT project, programme and portfolio
management consultancy in the Mid-West region of the United States
("US"), with a presence in Minneapolis, Milwaukee and Chicago.
Trissential operates across four principal sectors, with a strong
alignment to SQS's existing strength in manufacturing, while adding
significant expertise in retail, energy and healthcare. In the year
ended 31 December 2014, Trissential recorded revenues of $32.3
million and profit before tax of $1.6 million.
Acquisition Rationale
The Acquisition provides SQS with a substantial and stable
revenue platform, supporting SQS's stated strategy of diversifying
its geographic revenue split by materially enhancing its operations
in the US. For the 12 months to 31 December 2014, SQS generated
EUR12.3m revenue in the US, accounting for 5% of total group
revenue.
The Acquisition will approximately quadruple SQS's existing
onsite delivery capability in the United States and adds
significant exposure to the active IT services market in the
Mid-West region. Importantly, Trissential brings with it
established and valuable relationships with a range of customers.
From this base, SQS will seek to develop further business for its
testing activities, including SQS's offshore capability.
Trissential is expected to add materially to SQS's US revenue
contribution in the current financial year.
Trissential brings with it a strong management team headed by
Keith Korsi, Managing Director. Keith will continue to lead the
Trissential business under SQS's ownership.
Acquisition Consideration
The consideration for the Acquisition will be satisfied by a
combination of cash and SQS shares. Under the terms of the
Acquisition, SQS will pay the vendors of Trissential an initial
consideration of $17.7 million, comprising a cash payment of $11
million, to be funded from existing cash and a new credit facility,
and $6.7 million payable in shares, equating to the issue of
737,804 Ordinary Shares, based on the average middle market closing
price of SQS shares during the 20 business days preceding 29 April
2015 (and converted into US dollars at the exchange rate prevailing
on each day) (the "Reference Share Price").
A further $3 million of consideration will be payable, subject
to any indemnity claims, in SQS shares, based on the Reference
Share Price, between 18 and 24 months from the completion date of
the Acquisition.
Finally, earn-out consideration of up to $10 million (the
"Earn-out Consideration") will be payable subject to the
achievement of certain performance-related targets over next three
years. The Earn-out Consideration will be payable within 90 days
from the end of the earn-out period which ends 36 months following
completion, and satisfied as to 55 per cent in cash and 45 per cent
in new SQS shares, the number of which will be calculated using the
Reference Share Price.
Application will be made for the Initial Consideration Shares to
be admitted to trading on AIM following completion of the
Acquisition. All consideration shares to be issued to the vendors
of Trissential in connection with the Acquisition will be subject
to orderly market trading provisions that 25% of the consideration
shares can be sold in each 6 month period after the date of
receipt, except in the relation to any sale by the vendors of SQS
shares to meet such tax liabilities that may arise in relation to
the Acquisition.
SQS intends on retaining Trissential's separate legal status for
the foreseeable future. From an accounting perspective, Trissential
will be consolidated into the SQS group in full.
It is expected that the Acquisition will complete in June
2015.
Commenting on the Acquisition, Diederik Vos, Chief Executive
Officer of SQS said: "We are delighted to welcome Trissential to
the SQS group; it strengthens our existing foothold and capability
in the United States and immediately significantly enhances our
scale in North America, a key stated strategic objective for this
year.
"Trissential's strong management team has built a highly
successful IT project, programme and portfolio management business
in the Mid-West, with a suite of long standing, high quality
customers bringing with them a strong recurring revenue stream.
"We are very pleased that Keith Korsi will continue to lead the
Trissential business. We believe that this Acquisition will support
the strategic build out of specialist consulting both in the US and
globally in line with our strategic goals as well as providing a
strong platform to further develop our testing business in the key
US market."
Commenting on the Acquisition, Keith Korsi, Founder and Chief
Executive Officer of Trissential said:
"The Acquisition by SQS marks a significant milestone in the
evolution of Trissential. We are delighted to be joining the SQS
team, given not only the obvious synergies between our
organisations but also the clear opportunities for expanding our
capabilities and offerings to our and SQS's customers, which we
believe will fuel our growth in the US market."
Enquiries:
SQS Software Quality Systems AG Tel. +49 (0) 2203 91
54 0
Diederik Vos, Chief Executive Officer
Rene Gawron, Chief Financial Officer
Canaccord Genuity - Nomad and Joint Broker Tel +44 (0) 20 7523
8000
Simon Bridges / Peter Stewart / Emma Gabriel
Westhouse Securities - Joint Broker Tel. +44 (0) 20 7601
6100
Robert Finlay / Antonio Bossi
Walbrook PR - Financial Media and Investor Tel. +44 (0)20 7933
Relations 8780
Paul Cornelius / Sam Allen / Nick Rome sqs@walbrookpr.com
About SQS
SQS is the world's leading specialist in software quality. This
position stems from over 30 years of successful consultancy
operations. SQS consultants provide solutions for all aspects of
quality throughout the whole software product lifecycle driven by a
standardised methodology, offshore automation processes and deep
domain knowledge in various industries. Headquartered in Cologne,
Germany, the company now employs approximately 4,200 staff. SQS has
offices in Germany, UK, US, Australia, Austria, Egypt, Finland,
France, India, Ireland, Italy, Malaysia, the Netherlands, Norway,
Singapore, South Africa, Sweden, Switzerland and UAE. In addition,
SQS maintains a minority stake in a company in Portugal. In 2014,
SQS has generated revenues of EUR268.5 million.
SQS is the first German company to have a primary listing on
AIM, a market operated by the London Stock Exchange. In addition,
SQS shares are also traded on the German Stock Exchange in
Frankfurt am Main.
With over 7,000 completed projects under its belt, SQS has a
strong client base, including half of the DAX 30, nearly a third of
the STOXX 50 and 20 per cent of the FTSE 100 companies. These
include, among others, Allianz, Beazley, BP, Centrica, Commerzbank,
Daimler, Deutsche Post, Generali, JP Morgan, Meteor, Reuters, UBS
and Volkswagen as well as other companies from the six key
industries on which SQS is focussed.
For more information, see www.sqs.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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