31st Jul 2019 15:45
(Alliance News) - Idox PLC on Wednesday it will buy public sector software house Tascomi Ltd for up to GBP7.2 million, which IDOX said will accelerate its strategic plans and enhance its technological capabilities.
The processes simplification software provider added that it will raise GBP7.0 million via placing of 25.9 million shares at 28.5 pence per share to fund the acquisition. The placing price represents a discount of 3.1% to the company's closing share price of 29.50p on Tuesday.
Shares in Idox were up 0.9% at 29.65p each on Wednesday afternoon, giving the company a market capitalisation of GBP123.2 million.
Idox hopes the deal will help it to establish new products, avoid redevelopment costs, and improve its customer offering. It also predicts the deal will grow annualised recurring revenue and lead to operational savings.
The acquisition of Tascomi, which is based in Northern Ireland, is expected to be earnings enhancing in the first full year of ownership, being the financial year ending October 31, 2020. Completion of the acquisition is expected to occur on August 12.
Under the terms of the deal, Idox will pay GBP5.4 million immediately in cash, plus GBP1.2 million to extinguish all existing debt owed by Tascomi and a further GBP570,000 within seven months depending on settlement of various completion matters.
"This acquisition offers a sound strategic fit as we look to enhance our overall cloud offering in conjunction with growing our SaaS revenue base. It will also build on the significant operational progress our group has made in the last year, reshaping our board and senior management team, and establishing sound business models to drive great value from the assets we have in our business," said Idox Chief Executive David Meaden.
In the financial year ended March 31, Tascomi generated revenue of GBP1.9 million and delivered adjusted earnings before interest, taxes, depreciation and amortisation of GBP700,000. Currently annual recurring revenue stands at GBP1.8 million.
Idox separately said directors including its chair and chief executive have participated in the fundraising for the Tascomi acquisition.
Non-Executive Chair Chris Stone has bought 350,877 shares, resulting in total holding of 936,377 shares, or 0.2%. Chief Executive Meaden bought 175,439 shares, resulting in total holding of 468,139 shares, or 0.1%.
Chief Financial Officer Rob Grubb bought 70,175 shares, his entire stake in the company. Director Phil Kelly acquired 105,263 shares, his entire shareholding.
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