Andover, Mass.—May 29, 2014—PROACTIS Holdings PLC, a specialist spend control software provider, announced that it entered into an agreement to acquire the entire issued and to-be issued share capital of Intesource Inc. for $3.9 million, payable in cash on completion of the acquisition. 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.
Intesource is a provider of e-auction 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 recognized by Gartner, which classified Intesource as a "cool vendor" in its report during May 2013.
The directors believe that the acquisition can 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 e-auction 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 now have access to end-to-end procurement solutions from the PROACTIS Group.
For the year ended 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.
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. The group is funding the acquisition from its own cash resources.
Rod Jones, CEO, 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 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 e-auction 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."