17th Oct 2014 08:43
LONDON (Alliance News) - First Derivatives PLC Friday said it has increased its stake in big data vendor Kx Systems, paying GBP36.0 million to acquire a further 46.47% stake.
The acquisition means that First Derivatives, which provides software and consulting services to the financial services industry, now owns 65.2% of Kx.
Under the deal, First Derivatives has agreed to acquire 717,160 Kx Systems shares at the end of October and the right to acquire up to a further 84,099 Kx shares on or before November 20. It will pay GBP23.9 million in cash and 1.2 million new First Derivative shares at a price of 968.6 pence per share.
First Derivatives shares were Friday quoted up 5.0% at 1,031.95 pence.
First Derivatives also has agreed with the founders of Kx Systems to purchase their remaining shareholding at the same valuation for a period of seven years at their request on one year's notice.
First Derivatives agreed a new five-year loan facility of GBP24 million with Bank of Ireland in addition to its other banking arrangements to support the Kx acquisition "and other potential investments".
First Derivatives expects the deal to boost earnings in its current financial year.
First Derivatives, which is currently focused on the capital markets, said the deal provides a "clear path" to expanding into other vertical markets. Kx co-founders Arthur Whitney and Janet Lustgarten will remain with the business, with the latter expected to join First Derivatives' board.
Kx, which counts exchanges, regulators, hedge funds and investment banks among its customers, has recently signed a number of deals in the oil and gas, pharmaceutical and utilities sectors, according to First Derivatives.
First Derivatives said the deal allows it to offer customers the alternative of either using kdb+ and First Derivatives' consulting talent or buying applications using Delta, First Derivatives' surveillance software platform, which is powered by kdb+.
"We have been successfully focused on Wall Street for 20 years because of the large data sets they have. Now because the internet of things is generating large data sets in other industries we need to grow to be able to address these new opportunities. First Derivatives, with its deep pool of engineering talent and its global footprint is the ideal partner to help accelerate our growth, scale the company and to bring kdb+ to a wider audience," Kx's Lustgarten said in a statement.
First Derivatives Chief Executive Brian Conlon said: "We intend to make significant investments in Kx to allow the founders and their team to scale the company whilst staying true to its heritage. Transformational is a term often overused in the technology industry, but in this case I can confidently use it to describe the impact this transaction will have on our collective prospects."
Kx reported revenue of USD13.6 million and pretax profit of USD8.8 million in 2013. This included sales in that period to First Derivatives of USD650,000 million. First Derivatives' share of profits of Kx in the year to February 2014 was GBP268,000 and the group received dividends from Kx during this period of GBP773,000. The net assets of Kx at the end of 2013 amounted to USD3.2 million.
By Samuel Agini; [email protected]; @samuelagini
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