LONDON (Alliance News) - IT services company Pinnacle Technology Group PLC on Friday said it has agreed to acquire adept4 Ltd, funded by a loan notes issue, and intends to change its name to adept4 PLC.
Pinnacle said it will pay an initial GBP4.5 million in cash, plus deferred consideration of GBP1.0 million payable in January 2018. A further GBP1.5 million will be paid based on adept4 meeting performance targets through to December 2017.
The acquisition will be part-financed through a GBP5.0 million loan note issue to the Business Growth Fund, along with an associated option to subscribe for Pinnacle shares at 6.0 pence per share. Shares in Pinnacle were up 10% to 7.17p on Friday morning.
The Business Growth Fund is backed by UK banks and provides funding for small and medium-sized businesses.
adept4 is an IT services provider, providing cloud-based services, plus software support and development. In 2015, adept4 made GBP750,000 in earnings before interest, taxation, depreciation and amortisation, on revenue of GBP5.0 million.
Pinnacle said that, following the disposal of legacy assets on its books, on completion of the acquisition it will change its name to adept4. The changes will be put to a general meeting due to be held on June 13.
"This is a pivotal moment for Pinnacle as it completes the turnaround of the business which we set out to do in January 2016. Having executed five acquisitions and three disposals in just over four months, we have moved from a loss-making company with liabilities to a sustainable operational platform with healthy gross profit margins and high recurring revenues," said Pinnacle Executive Chairman Gavin Lyons.
"Our focus is now on the integration of our acquisitions so that we can scale our asset light, 'IT as a Service' proposition we have for UK SME business. Our strategy remains the same, and we will continue to focus on growing the company organically and through acquisition," he added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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