25 July 2011 – acquisition

The acquisition of FD Systems Ltd, a Sage and e-commerce provider, has been announced.  The consideration for the acquisition is £2.23m payable in cash on completion, together with repayment of loans of £0.41m.  Further cash consideration of £0.4m will be payable following completion dependent on certain conditions being met.  Up to £1m in cash may also be payable after 12 months depending on performance.  

This looks an attractive deal.  The acquired business is expected to contribute an underlying profit of approximately £750k on revenues of around £7.0m on an annualised basis.  The shares were already trading on a multiple of less than 10 times forecast earnings for the current year prior to this deal and look cheap.  We maintain our BUY rating.