2 April 2015
Redcentric plc
("Redcentric" or the "Company")
Acquisition of Calyx Managed Services
Redcentric plc (AIM:RCN), a leading UK IT managed services provider, is pleased to announce that it has conditionally acquired Calyx Managed Services Limited ("Calyx") for a total consideration of £12 million, payable in cash on completion(subject to an adjustment for restructuring costs) (the "Acquisition"). Completion is expected to occur on or around 13 April 2015.
The Acquisition is expected to be immediately earnings enhancing. Calyx's portfolio of services and its range of customers are an excellent strategic addition for Redcentric, which will provide these new customers with high levels of service and exposure to a broader suite of solutions.
Redcentric is acquiring Calyx from MXC Capital Limited ("MXC Capital") following a period of significant restructuring, which included the disposals of the Break Fix and Carrier Services divisions. The acquisition is conditional on the completion of these disposals. Calyx is now a focused IT managed services and professional and infrastructure services business, free of liabilities arising from the restructuring process.
For the year ended 31 December 2014, Calyx's IT managed services and professional and infrastructure services business generated a turnover of £9.1 million and a gross profit of £5.1 million. As at 31 December 2014, the business had gross assets of £4.3 million. The Acquisition will be funded by a new bank facility announced separately today.
Fraser Fisher, Chief Operating Officer of Redcentric, commented;
"We are delighted with this acquisition: it fits our strategy well, and will be earnings enhancing as we expect to generate operating margins in line with our existing business. We welcome the Calyx clients and look forward to providing a high quality service while offering a broader range of solutions. This acquisition builds on our successful and growing Redcentric platform; following the integration of Calyx we will seek to augment our strong organic growth with further acquisitions that fit our investment criteria."
Related Party Transaction
The Acquisition is considered a related party transaction under the AIM Rules for Companies ("AIM Rules") on the basis that MXC Capital is a substantial shareholder in the Company and Tony Weaver, CEO of Redcentric, is a substantial shareholder of MXC Capital by virtue of his interest in MXC Holdings Limited (which is interested in 53 per cent. of the share capital of MXC Capital). In addition, Redcentric is paying corporate finance advisory fees of £300,000 to MXC Capital Advisory LLP ("MXCA") for advisory services in relation to the Acquisition (the "Advisory Fee") under an existing engagement with MXCA which is retained as corporate finance adviser to the Company. The payment of the Advisory Fee is considered to be a related party transaction under the AIM Rules for Companies on the basis that MXC Capital is the ultimate controlling party of MXC Capital Advisory LLP.
The directors, with the exception of Tony Weaver who is considered a related party under the AIM Rules for the purposes of the Acquisition and the Advisory Fee, consider, having consulted with finnCap Limited, that the terms of the Acquisition and the Advisory Fee are fair and reasonable insofar as shareholders of the Company are concerned.
Enquiries:
Redcentric plc Tel. +44 (0)845 034 1111
Tony Weaver, Chief Executive
Fraser Fisher, Chief Operating Officer
Tim Coleman, Chief Financial Officer
finnCap - NOMAD & Broker Tel. +44 (0)20 7220 0500
Charlotte Stranner / Simon Hicks
MXC Capital Advisory LLP - Financial Adviser Tel: +44 (0)20 7965 8149
Marc Young
Newgate Tel: +44 (0)20 7653 9850
Tim Thompson / Jasper Randall
