PROACTIS News

PROACTIS Buys US eAuction Software Company Intesource

PROACTIS, a global Spend Control and eProcurement solution provider, is pleased to announce that it has entered into an agreement to acquire Intesource Inc for $3.9 million, payable in cash on completion. The net cash consideration is expected to be approximately $2.9 million as Intesource is expected to have approximately $1.0 million of cash at completion.

Highlights

  • Intesource will increase the Group's scale and profitability, and provide a substantial footprint and expertise in the US market
  • The Acquisition brings a Gartner recognised expert reverse eAuction offering, delivered as true Software-as-a-Service, which is complementary to the Group's existing service and software suite
  • Over 25 new clients and significant scope for cross-selling opportunities
  • Clients follow a subscription-based business model with, typically, 2 to 4 year term contracts
  • Annual recurring revenue to be acquired as part of the Acquisition is anticipated to be in excess of $4.5 milllion

Rod Jones, CEO PROACTIS commented: "Intesource is an excellent strategic fit for PROACTIS, and marks a significant step in the Group's growth strategy through the provision of increased scale, profitability and further growth opportunities. In addition the Group will benefit from synergies with its existing US operations.

"The acquisition widens our breadth of offering with an expert service delivery capability from a Gartner recognised "cool vendor". The depth of experience and software capability provided by Intesource bolsters the Group's existing strong offering, and reflects the increasing need of our customers for eAuction services. We are now in a strong position to begin delivering these services to clients immediately and look forward to updating the market on our progress in due course."

Information on Intesource

Intesource is an established provider of eAuction services (using its own proprietary service delivery know-how and software platform) and has more than 25 clients delivering over $4.5 million of recurring annual income profitably. The service offering was recognised by Gartner which classified Intesource as a "cool vendor" list in its report during May 2013.

The Directors believe that the Acquisition will provide further scale and profitability and offers strong opportunities to cross-sell its own complementary product suite. In addition, operational savings are expected through the consolidation of elements of its existing operations in the United States. Intesource's current eAuction service delivery know-how and the software platform significantly bolsters PROACTIS's offering, by accelerating the service offering to clients and saving forward development costs.

Customers of both PROACTIS and Intesource can look forward to the delivery of broadened services and solutions to support operations, enhance procurement effectiveness and extend collaboration with suppliers. In addition, Intesource's customers will now have access to truly "end-to-end" eProcurement solutions from the PROACTIS Group.

For the year ended 31 December 2013, the audited accounts of Intesource showed turnover of $5,026,000 on which it made an operating profit of $610,000. Gross assets at that date were $2,889,000.

Further information on the Acquisition

Upon completion of the Acquisition, PROACTIS will issue new ordinary shares of 10p each in the capital of the Company ("Ordinary Shares") to the value of approximately $0.4 million to certain key employees of Intesource to settle Intesource's bonus obligations to them. These Ordinary shares will be subject to lock-in conditions over a period of one year from completion.

Completion of the Acquisition is conditional principally upon consents, approvals and agreements with certain customers, suppliers and stakeholders of Intesource and confirmatory certificates from the appropriate regulatory authorities in the United States being received. Completion of the Acquisition is expected to occur within a period of up to six weeks from today, assuming that there is no material adverse affect to Intesource's financial position and performance over that time.

The Group will fund the Acquisition from its own cash resources.

A further update will be made as and when required.

 
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