Adept4 goes loco for CloudCoCo
CloudCoCo was founded by former Redcentric sales directors
AIM-listed Adept4 has agreed to splurge £6.1m for Leeds-based firm CloudCoCo.
CloudCoCo is a cloud, IT hardware and services company that counts Cisco, Microsoft, AWS and Alibaba among its partners. It was formed in 2017 by former Redcentric sales directors Mark Halpin and Graham Collinson.
Adept4 has had a challenging couple of years and has recently finished a cost-cutting programme after incurring a $583,000 (£472,000) net loss in its year ending 30 September 2017.
However, it has since had an upswing in fortunes, reporting turnover doubling to £10m in its most recent financials for the 12 months ending 30 September 2018, as well as securing a Microsoft Gold Cloud Platform partner accreditation.
"The company has, over recent months, explored several strategic options including the proposed acquisition which, the board has concluded, represents the best opportunity to return to growth and generate long-term value for all stakeholders," stated Adept4.
"Though only recently established, CloudCoCo is currently trading profitably and has a strong and growing pipeline of new business opportunities.
"The CloudCoCo management team has already shown its ability to win new business using its agile sales methodology and believes that the customer base of Adept4 will respond positively to this modern way of working."
The acquisition will be funded by loan notes, which will be exchangeable immediately on completion for 218,160,586 ordinary shares in the enlarged company, which would represent 49 per cent of total shares.
The mid-market closing price per share before the announcement was 2.8p, bringing the total value of the deal to £6.1m.
Andy Mills, chairman of CloudCoCo, is being moved into the role of Adep4's CEO and Halpin, Collinson and Robert Speight will join the enlarged business.
Simon Duckworth, non-executive chairman of Adept4, stated: "We are delighted that, conditional on shareholder approval, we have agreed to acquire CloudCoCo.
"We are proposing to acquire a business which has expanded rapidly since establishment and, by harnessing CloudCoCo's proven and experienced salesforce with our existing operations, we believe that there is a clearly defined opportunity to return Adept4 to growth.
"We have also reached agreement, subject to completion of the acquisition, to revise the terms and reduce the level of the group's indebtedness. We view these proposals as positive developments as we seek to recover value for our shareholders".