Castleton set to be acquired by US vendor for £82.8m

The acquisitive MSP has agreed to a deal which will see it bought by housing specialist MRI Software

Birmingham-headquartered Castleton Technology has agreed to be acquired by US-based MRI Software for £82.8m.

The AIM-listed managed service provider specialises in IT support for the housing sector and operates in the UK, Ireland and Australia.

MRI was attracted to the MSP's cloud-based technologies and the potential it offers the ISV for international reach.

"The acquisition of Castleton is a significant development for our business, delivering us critical scale in the UK real estate market and social housing sector in particular, and providing a platform to further accelerate our growth globally," stated Patrick Ghilani, MRI CEO.

"A combined MRI and Castleton will be extremely well equipped to address the varying needs and evolving business models of the UK and Australian social housing sectors, with a comprehensive and flexible product portfolio.

"We are excited to work with the management team and employees of Castleton, to build upon their position in the social housing sector, utilising MRI's complementary experience, capabilities, network and resources."

The board of directors of both companies have agreed on the deal and are now awaiting shareholder approval of the acquisition.

The agreement comes hot on the heels of MRI's acquisition of Newcastle-based Orchard Information Systems last month.

Castleton has been on an M&A spree itself in recent years, snapping up Deeplake Digital and Indian IT consultancy CarbonNV InfoLogic last year. It reported revenues of £23.3m for its year ending 31 March 2019, but in a trading update in September cautioned of a weaker performance for its FY20.

David Payne, none-exec chairman of Castelton, said that the deal comes as the "competitive landscape is changing".

"Castleton has performed well since embarking on the strategy in 2013 to build a public sector-focused software and managed service business, growing organically as well as through a series of acquisitions," he stated.

"The Castleton directors believe that MRI Software will be an excellent partner to Castleton and its management and employees. We believe the acquisition is in the best interests of all our stakeholders and unanimously recommend that shareholders vote in favour of the resolutions relating to the acquisition."