CloudCoCo agrees sale of services business to Aspire for £9.2m

Deal marks Aspire’s second major acquisition of the year

Leeds-HQ managed services provider CloudCoCo Group has announced plans to sell its subsidiary, CloudCoCo Limited, to Aspire in a deal valued at up to £9.2m.

CloudCoCo Limited is a UK provider of IT managed services solutions to private and public sector organisations delivering services built around connectivity, multi-cloud, collaboration and cybersecurity.

The company serves approximately 360 business customers and for the year ended 30 September 2023, reported a turnover of £7.26m.

The sale is a key step in CloudCoCo's strategy to address outstanding financial obligations and refocus its business.

Under the agreement, the entire share capital of CloudCoCo Limited will be sold to Aspire following an internal reorganisation.

The gross cash consideration of £9.2m will be adjusted to approximately £7.85m on a debt-free, cash-free, and normalised working capital basis, provided CloudCoCo Limited has enough working capital after completing the transaction.

The proposed sale represents a fundamental change in the business of AIM-listed CloudCoCo Group and will require shareholder approval under AIM Rule 15.

The general meeting to approve the transaction will be held on 31 October 2024 at DAC Beachcroft LLP's offices in London.

“[This] marks a positive step for the group, enabling us to eliminate long-term debt and focus on expanding our value-added reseller operation, particularly in e-commerce, where we see significant opportunity,” said non-executive chair Simon Duckworth in a statement.

“While 2024 has presented trading challenges, we are confident the strategic shift announced today secures the group's long-term future.”

The statement added that CloudCoCo is in advanced talks to sell its Connect datacentre services wing business.

This is the second major deal of the year for Aspire, which bought out Glasgow-based MSP Cloud Cover IT in January.

The announcement comes just six months after CloudCoCo founder Mark Halpin stepped down from the business in April

Halpin founded the Leeds headquartered service provider in 2018 and transformed the start-up into a £30m turnover MSP in six years.

Ian Smith, CEO of MXC Capital Limited, the parent of MXCG, CloudCoCo's loan note holder, has since been acting as interim CEO of the group's trading entities.