14th Dec 2016 16:35
LONDON (Alliance News) - Software provider IDOX PLC on Wednesday said it has agreed to buy Malta-listed 6PM Holdings PLC in a deal funded by a share placing, as IDOX reported growth in pretax profit for its financial year that ended in October.
6PM, founded in 2004, provides software and services, mainly to the UK National Health Service. IDOX said the deal will expand its presence in the UK public sector software sector, increase its customer base and present cross-selling opportunities.
IDOX said it will pay a total of GBP18.5 million to acquire 6PM, with the consideration partly in cash and partly in shares. IDOX will pay 44.00 pence per share for 6PM in cash, plus 0.6542 new IDOX shares per 6PM share under the deal.
In order to fund the purchase, IDOX raised its desired amount of GBP20.5 million, with net proceeds of GBP19.7 million, via a placing. The funds were raised via an accelerated bookbuild launched Wednesday and run by N+1 Singer Advisory LLP, with 34.2 million shares issued at 60.0 pence per share.
IDOX shares closed at 68.37p on Tuesday, 14% higher than the issue price, and were down 6.1% at 65.75p on Wednesday afternoon after the results of the placing were published.
The shares represent 8.4% of the enlarged issued share capital of the group.
"The acquisition of 6PM is in line with our strategy of becoming a broader public sector provider and is expected to deliver a wide range of potential benefits - significant expansion in the large health and social care market, important enhancements to our digital services platform, and exciting opportunities to cross sell and derive operational synergies," said IDOX Chief Executive Andrew Riley.
The acquisition was announced as IDOX said it made a pretax profit of GBP13.0 million in the year to October 31, up from GBP9.8 million a year earlier, as revenue rose 23% year-on-year to GBP62.6 million.
IDOX said its public sector software business was strong in the recent year, with organic revenue growing 5.0% as the company won 90 new local authority customers in the UK. Results also benefited from acquisitions IDOX made over the course of the year.
IDOX proposed a final dividend of 0.65 pence per share, up from 0.525p a year before, and taking its total payout up 18% year-on-year to 1.00p from 0.85p.
"IDOX has reported another year of strong progress, driven by organic growth complemented by contributions from acquisitions, underpinned by our strategy of positioning the group as a key partner to enable its customers to achieve significant efficiencies through digital technologies," said Andrew Riley, IDOX's chief executive.
"Overall, the outlook for IDOX in the coming years is therefore very positive and our expectations for the group's financial performance are unchanged," he added.
A general meeting will be held on January 5 to seek support for resolutions which need to be passed for the placing to become unconditional. The acquisition must also become unconditional for the deal to go through. The acquisition, however, is not reliant on the placing being approved.
By Sam Unsted; [email protected]; @SamUAtAlliance. Updated by Joshua Warner; [email protected]; @JoshAlliance
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