Software firm Proactis has acquired e-procurement solutions provider Due North Limited from its parent company Access Intelligence for a gross cash consideration of £4.5m.
Wetherby-based Proactis said the acquisition enhances its position as a leading provider of e-procurement systems to the UK market. It now serving over 800 clients, adding 300 new clients as a result of the acquisition.
The acquisition is expected to be immediately earnings enhancing and is financed from non-dilutive capital.
Annual recurring revenue from Due North is approximately £1.6m through its 3-4 year contracted subscription business model and the acqusition will provide substantial cross-selling opportunities to Proactis.
Rod Jones, CEO of Proactis, said: “I am delighted to announce the acquisition of Due North which is an excellent strategic fit - consolidating the group’s position as the largest independent e-procurement solution provider in the UK market.
“Due North’s market penetration is substantial and should immediately benefit the wider Proactis business. I look forward to working with the team at Due North to grow the business and provide the wider client base with our end to end solutions.”
The deal is in line with Proactis’ strategy of augmenting organic growth with selective acquisitions.
York-based Access Intelligence said the divestment of Due North was in line with its strategy to focus on Software-as-a-Service (SaaS) solutions in reputation and risk management.
Joanna Arnold, CEO of Access Intelligence, said: “Over the last 12 months, we have pruned non-strategic businesses to provide the Group with greater financial flexibility and create value for our shareholders.
“We would like to thank Malcolm McClen and the fantastic team at Due North for their valuable contribution to the group and wish them and Proactis every success in the future.”
Due North’s market penetration is substantial...Rod Jones, CEO of Proactis
Access Intelligence said the net proceeds of the disposal will be used to strengthen its balance sheet and provide additional working capital to support growth and development.
Due North, established in 1993, is a leading provider to the public sector of cloud-based strategic sourcing solutions in the UK.
The company’s clients use its hosted software to control an estimated £100bn of spend through about 200,000 active suppliers by approximately 20,000 procurement professionals.
For the audited year ended 30 November 2014, Due North reported revenue of £2m on which it made an operating profit, before depreciation and amortisation, of £0.5m and its reported net assets were £2.3m.
In the financial year ended 30 November 2015, Due North’s unaudited management accounts report a revenue contribution of £1.8m with EBITDA of £0.4m and profit before tax of £0.2m. The total value of the net assets being disposed of as at 30 November 2015 was approximately £2.5m.
Commercial law firm Walker Morris advised Proactis on the acquisition.
Richard Naish, from Walker Morris Corporate Group, who along with Edward Ainscoe advised on the deal, said: “Proactis is a long standing client of the firm and we’ve been delighted to work with them as they’ve grown and developed as a business.
“This acquisition undoubtedly reaffirms their position as the largest independent e-procurement solution provider to the UK Public sector and offers opportunities for enhanced earnings and future operational synergies.”