Iomart acquires cloud services provider Extrinsica
Iomart Group, the Glasgow-based cloud computing company, is acquiring Extrinsica Global Holdings in a cash and shares deal worth up to £4.3 million.
Oxford-based Extrinsica, was founded in 2010 and In 2017 it was invited by Microsoft to become one of the first 25 Microsoft Azure CSP partners worldwide. It is now solely Azure public cloud focused.
The acquisition provides iomart with deep Microsoft Azure expertise and an additional team of 33 based in the UK.
Simon Smith, CEO and Co-Founder of Extrinsica, will continue to lead the business as CEO supported by his highly skilled and experienced team.
For the year ended 31 March 2023, Extrinsica generated revenues of £7.4m, being year on year growth of c.40%, and EBITDA of £0.1m (unaudited).
The initial consideration for the acquisition is £4m, with a potential further £300,000m in cash payable on the achievement of certain key customer targets during the calendar year.
Of the initial consideration, £2m will be satisfied by the issue of 1,562,500 new ordinary shares in Iomart on a fixed share price of 128p, being the volume weighted average price for the 90 days prior to completion. The balance of £2m will be paid in cash. Iomart will also repay £3.7m of debt acquired on completion.
The acquisition also includes a further £4m to £7m of contingent earn-out payments which are calculated based on Extrinsica’s profitability for the 12 months ending 31 March 2024.
The initial consideration, debt settlement and any earn out consideration will be financed through a combination of existing bank facilities and cash on the company’s balance sheet.
The vendors of Extrinsica include the existing management team while the largest shareholder is The Vale Retirement Trust with a 25% stake. This trust is an investment vehicle for a high wealth individual who is not involved in the management of the business.
Trading in the new shares is expected to begin on 8 June.
Reece Donovan, CEO of iomart Group, said: “This is a meaningful step in our strategy as we position the Group for its next phase of growth as a leading secure hybrid cloud business.”
Mr Smith, CEO of Extrinsica, commented: “Joining iomart marks an exciting phase for our highly skilled, experienced and ambitious team, providing us with a strengthened platform for growth. It allows us to leverage joint capabilities, capitalise on our understanding of the markets we operate in and build upon our significant achievements to date.”