14th Jan 2014 11:11
LONDON (Alliance News) - Proactis Holdings PLC Tuesday said it has agreed to acquire rival EGS Group Ltd in a GBP2.9 million cash deal, an acquisition that the company says will make it the biggest independent online procurement provider to the public sector in the UK.
In a statement, Proactis said it expects to pay a net cash consideration of about GBP2.2 million, because EGS has about GBP700,000 in cash.
It said the acquisition will give it over 70 new clients, managing more than GBP2.5 billion of spending through 40,000 supplies. It expects annual recurring revenue from the acquisition to be more than GBP1.6 million, while operational synergies will boost profitability in the enlarged company.
EGS reported revenues of GBP2.8 million in 2012 and an operating profit of GBP404,000. Its gross assets at the end of that year were GBP1.4 million.
"EGS is an excellent strategic fit for PROACTIS, creating what I believe will be the largest independent eProcurement solution provider in the Public Sector specifically and the UK market generally. Its substantial scale, level of profitability and available synergies will immediately benefit the wider Proactis business," Rod Jones, chief executive, said in a statement.
The acquisition, which depends on certain EGS minority shareholder considerations, will be funded by bank debt provided by HSBC Bank PLC through a GBP1.5 million loan.
Proactis shares were Tuesday quoted at 38.00 pence, up 1.5 pence, or 4.1%.
By Samuel Agini; [email protected]; @samuelagini
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