Directors in cloud computing company Iomart have sold a large chunk of shares
on the same day the firm completed one of its largest acquisitions.
Glasgow-headquartered Iomart has acquired Leeds-based cloud data backup and disaster recovery services provider Backup Technology (BTL) for £17.5m cash and £3.5m in new shares, with a further £2m cash payable on January 31st.
Iomart also revealed trading was in line with current market expectations, with a "strong" first months of the new year and profits "substantially" ahead of the comparative period last year. House broker Peel Hunt had forecast $14m profit before tax for the full year.
Profitable BTL will contribute to this further, having made £2.4m earnings before interest, tax, depreciation and amortisation in 2012 from a client list that includes Siemens, British Red Cross, Lloyds Register, Suzuki, Pernod Ricard and Liverpool Football Club.
The deal was financed by a new £35m Bank of Scotland facility, with £14m drawn down within this to repay existing bank facilities, leaving the AIM-listed company with a net debt position of approximately £26m.
Management stressed that the cash generative nature of the existing business would be enhanced by the acquisition and "enable all debt service metrics to be met and allow the group to repay debt going forwards as it falls due".
Concurrently, founder and Chief Executive Angus MacSween, Finance Director Richard Logan and Chief Operating Officer Sarah Haran together revealed they intended to sell £11.8m of their shares in the company.
MacSween, who organised the share placing to allow him to rebalance his personal portfolio and utilise his entrepreneurs' tax relief, will still have a considerable stake of around 15% and has agreed not to sell any further shares for the foreseeable future and no earlier than the release of the publication of the final results for the year ended March 31st 2015.
The board said it believed the placing would be of benefit to the company by increasing both the free float and the liquidity of its shares.
City analysts had mixed views on the acquisition, which Peel Hunt explained enabled iomart to "accelerate its penetration of the complementary cloud products market" and offered "good potential to sell BTL's products into iomart's existing base and in the medium term some operational synergies".
However, a note from Jonathan Imlah and Bob Liao at Canaccord read: "At more than 10 times historical EBITDA, compared with an average of four-to-six times for the majority of its previous deals, today's acquisition looks pricey."
The pair argued that the deal may signal a shift in strategy for Iomart to slightly larger deals "of the kind that management has shunned in the past as they were too expensive".
Furthermore, on the trading update, they added: "It is pleasing to see that revenues and profits are likely to be substantially ahead of last year but some observers will doubtless note that this is the first update for some time not to guide consensus upgrades".
Shares in IOM were down 2.5% to 283p.