Strategic Thought (“Strategic Thought” or “the Group”), the software and services provider which has developed a market-leading risk management software solution, is pleased to announce that it has agreed terms to acquire the entire issued share capital of Bristol-based Line International Limited (“Line”).
The total initial consideration for Line amounts to £1.2m, being £0.6m in cash payable on completion and the assumption of net debt of £0.6m. A further consideration of up to £1.56m is due, dependent on future results.
Established in 1992 by former employees of British Aerospace, Line has developed its own risk management software product, ‘RisGen’, which to date has been predominantly targeted at small to medium sized enterprises. Line has in excess of 60 customers across a range of sectors, including engineering, electronics and leisure. In particular, it has a significant presence within the local government marketplace.
Line generated turnover of £0.8m and a pre tax profit of £0.02m in the year to 30 April 2005 and at the date of acquisition Line has gross assets of £0.07m and tangible net liabilities of £0.6m.
The acquisition of Line provides Strategic Thought with a wholly complementary product to the Group’s own “Active Risk Manager” solution, with negligible overlap of customers. As well as providing a strong operational and corporate governance risk solution for enterprise customers, the RisGen product provides the Group with an entry level solution for the SME marketplace and access to new market sectors.
Strategic Thought anticipates that Line will contribute at least £250,000 of additional earnings in the year to April 2007 with no erosion of earnings in the current year.
The initial cash element of the consideration will be reduced dependent on the value of the tangible net liabilities of Line on completion. The deferred consideration will be payable in two instalments, the first ending on or before 30 June 2006, with the balance being payable on or before 30 November 2006. The cash element of the deferred consideration will be capped at £1.3 million. The balance will be payable in Strategic Thought ordinary shares valued at 155p per share. Shares issued to the vendors of Line will be subject to orderly market arrangements.
Richard Higgs, CEO of Strategic Thought, stated,
“The business case for acquiring Line was compelling on the grounds of quality of product, quality of people and quality of customer base. This acquisition extends our reach into new markets and we are committed to furthering the success of RisGen’s business and building on the opportunities which this acquisition provides. ”
Brian Carpenter, Managing Director of Line, commented,
“The acquisition will benefit all concerned. The expanded market penetration and product offering will assist the enlarged group in continuing its successful growth. “