REG - Northamber PLC - Acquisition of Renaissance Contingency Services

NorthamberAnnouncement

01/07/2024 07:00

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RNS Number : 4758U  Northamber PLC  01 July 2024

 

1 July 2024

 

Northamber PLC

("Northamber" or the "Company")

Acquisition of Renaissance Contingency Services Limited

Northamber Plc (AIM:NAR), a leading value-add AV & IT distributor, is
pleased to announce that it has acquired, from Michael Conway and Denis Woods
(the "Sellers"), Renaissance Contingency Services Limited ("Renaissance")
pursuant to a share purchase agreement (the "SPA") that was exchanged and
completed earlier today (the "Acquisition").

Renaissance, which is a company incorporated in Ireland, is a value-add
distributor of cyber security solutions and services in Ireland.

The total consideration for the Acquisition is up to €0.9 million in cash
(circa. £0.76 million; £1: €1.1814) to be paid from the Company's existing
available resources.

Acquisition highlights

·   Acquisition of Renaissance, an established distributor of cyber
security solutions and services to value added resellers, managed service
providers (MSPs) and hybrid resellers

·   Strong heritage as the "go to" distributor for cyber security in
Ireland counting industry leading suppliers such as Alludo, Bullwall,
Censornet, Opentext, Progress Software, Proofpoint, Solarwinds, Sonicwall,
WatchGuard and others

·   Broad range of Cyber Security solutions and knowledge ensures strong
vendor partnership and customer longevity; a strong portion of the business is
recurring through either annual renewals or a growing monthly billing MSP
element

·   The board of directors of Northamber (the "Board") believe that
Renaissance has a strong opportunity to build on the existing recurring
revenues business and presents a strong, scalable business with potential for
strong organic growth

·   In line with the strategy of building on Northamber's core technology
pillars of AV, UC&C, Cyber Security & Infrastructure Solutions,
including outside the UK, through organic growth and via strategic
acquisitions

The Directors believe the Acquisition will:

·   build on Northamber's almost 30 year heritage in Cyber Security; a core
strategic focus area for the Group

·   provide European expansion, especially into the Irish market, following
the recent acquisition of Tempura Communications which has an Irish and Dutch
Subsidiary;

·   provide strong cross selling opportunities in Ireland with an enhanced
offering in audio-visual, unified communications,and cyber solutions and
services; and

·   be value enhancing in the first full year of ownership (FY25), before
consideration of potential synergies, with an expectation that it will be
earnings enhancing from the second year of ownership (FY26).

Acquisition terms

Total consideration of up to €0.9 million, comprises:

·   €0.6 million in cash ("Initial Cash Consideration") paid following
completion of the Acquisition ("Completion").

·   Performance based contingent consideration of up to a maximum of €0.3
million ("Contingent Consideration"), based on the EBITDA for three financial
periods ending 30 June 2025, 2026 and 2027.  If it becomes due, the
Contingent Consideration will be paid in three instalments with the final
payment due to be made following completion of the audit of the enlarged
group's accounts for the financial year ended 30 June 2027.

The Initial Cash Consideration will be funded from Northamber's existing
available cash and debt facilities.  The Company anticipates that the
Contingent Consideration will be paid in the same way.

The SPA contains certain customary warranties and tax indemnities given by the
Sellers in relation to Renaissance and its business, subject to agreed
limitations.

Following the Acquisition, the Renaissance business will become a wholly owned
subsidiary of the Company.

Michael Conway and his team have agreed to continue with the business to
assist initially with the integration of Renaissance into the Northamber group
and thereafter to drive growth in the Company's activities in Ireland,
following the recent acquisition of Tempura Communications.

About Renaissance

Renaissance has been a trusted partner to Irish resellers and their customers
for over 30 years. With the introduction of new, cutting-edge, and
industry-leading Cyber Security and Compliance solutions in Ireland over the
past five years, Renaissance has created a security ecosystem linking its
Vendors, Value Added Resellers and End Users. Renaissance has built its
reputation by offering leading-edge market technologies, excellent pre/post
sales service to its extensive network base, and an ongoing desire to bring
added value to its customers. The Renaissance team has founded and continues
to run the Cyber Expo & Conference Ireland, now in its seventh year.

Based on the audited accounts for the year ended 30 June 2023, Renaissance had
revenues of €5.15 million, Gross Profit of €0.99 million and a loss before
tax of €0.02 million; net assets were €0.35 million. For the year ended 30
June 2024, Renaissance has seen a strong improvement in trading with revenues
expected to be approximately 20 per cent. ahead of the prior year, accompanied
by a move into profitability, with profits before tax of approximately €0.06
million for the 5 months ended 31 May 2024 (based on unaudited management
accounts).

Strategic Rationale for the Acquisition

Northamber has been a UK distributor of Cyber Security for 30 years, working
with leading brands like WatchGuard in the UK for over 25 years. The Board
believes that the Acquisition of Renaissance alongside the Tempura
Communications acquisition earlier this year, which also had an Irish presence
for its UC&C business, allows Northamber to bring its focus technologies
of Cyber Security, Network Infrastructure, Audio Visual and UC&C into the
Irish market and build a stronger European presence. The Board believes that
the terms of the Acquisition, and the valuation of Renaissance, are attractive
given the opportunities to diversify the Group's International footprint
whilst increasing on our focus technology areas. The Board sees scope to
leverage existing resources to accelerate growth via sharing best practice and
expertise across the portfolio companies.

As with the recent acquisition of Tempura Communications, the acquisition of
another well-established business further serves to expand the Group's service
offering, with opportunities for growth In Ireland through marketing efforts,
additional nationwide partners and cross-selling.

Alex Phillips, Executive Chariman of Northamber, commented:

"Having known Michael and the reputation of Renaissance for many years I am
thrilled to be welcoming Renaissance into the Northamber Group. There is a
very strong alignment between the values and approaches of the two companies
and the importance we place on proactively bringing Cyber Security solutions
to our partners. I am looking forward to working with Michael and his team to
continue building the Renaissance business in Ireland. "

Michael Conway, Managing Director of Renaissance, stated:

"To sustain our growth ambitions and to further enhance our value to the
vendors that we represent and to our clients and their customers whose cyber
protection is the priority, we continuously need to add capability,
partnerships, and scale. We concluded that the most effective way to achieve
this was to be acquired by a company matching our requirements and objectives.
Northamber is just such a company that has the portfolio, reach, financial
strength, and expertise to accelerate the pace at which Renaissance can
increase our relevance to our clients."

Contacts:

 Northamber PLC                                              investor_relations@northamber.com

 Alex Phillips, Executive Chairman
 Singer Capital Markets (Nominated Adviser and Sole Broker)  Tel: +44 (0) 207 496 3000
 Philip Davies / Finn Gordon

 

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