Shares in AIM listed Iomart Group (LON:IOM) edged up 1% to 89.5p this morning on news that the managed hosting and cloud computing services company had acquired Titan Internet Ltd for up to £4.2m in cash. Shares in iomart have been substantially re-rated over the last 12 month, rising from 48p at the turn of the year and hitting a 12-month high of 99.5p at the start of October. The company said today’s deal was in line with its strategy of becoming the UK's foremost hosting company, focused on the delivery of high end managed hosting environments and solutions.

Titan delivers managed hosted solutions and currently manages over 1,000 servers on behalf of a client base ranging from SMEs to large corporate clients. As at 31 August 2009, the net assets of Titan were £765k with revenues of £3,433K, EBITDA of £648k and pre-tax profits of £342k. Titan currently has net cash of approximately £500k. In addition to the client base, the purchase of Titan also gives iomart an experienced team in the managed hosting arena and potentially significant cost savings once Titan has been fully integrated into the group. As a result, iomart expects the acquisition to be immediately earnings enhancing before the one off costs of integration synergies. Of the total consideration of £4.2m, £3.6m has been paid on completion and a further amount of up to £0.6m is payable no earlier than 1 April 2011, subject to the certain performance criteria being met.

Last month, iomart said that trading in the first six month to September 30 had been strong and that it was set to beat performance expectations in both its interim and full year figures. The company said it had continued to win a substantial number of contracts delivering Cloud managed services and complex hosting solutions.

Angus MacSween, the chief executive of iomart, said: “Our strategy has always been to grow both organically and through acquisition. Having recently announced that our organic growth is ahead of market expectations, we believe the acquisition of Titan will accelerate that growth through the incorporation of an excellent managed hosting operation with an impressive client list.”

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