Eco City Vehicles acquiring Tax Computer Systems for £73m

(ShareCast News) - Eco City Vehicles announced on Friday that it has agreed to acquire Tax Computer Systems, a supplier of corporation tax software to the large corporate sector and the accounting profession in the UK and Ireland, for an enterprise value of £73m.The AIM-traded firm also revealed it has conditionally raised £45m by way of an oversubscribed placing of new ordinary shares.Its board said Tax Computer Systems comes with a leading blue chip customer base, with 43 FTSE 100 customers and 19 of the UK's top 20 accountancy firms.The business has been established for more than 25 years, with 90% of its £12.8m revenues recurring and a 52% EBITDA margin in 2015.Eco City confirmed the £73m enterprise value is payable in cash, representing an EV/EBITDA multiple of 11x."It has been our stated strategy to seek an investment in the technology sector where we believe there are opportunities for growth," said Eco City Vehicles non-executive director Clive Carver."TCS is a business that meets these criteria and represents a strong and stable platform from which to build a UK tax automation and compliance software business of scale."We look forward to the future with confidence," Carver added.The board went on to say the placing will raise £45m at a price of 67p per share, with a proposed consolidation of every 50 existing shares into one new share taking place at the same time.As part of the placing, MXC Capital is subscribing for £8.7m of equity and will own 20% of Eco City's issued share capital post admission, with MXC partner Gavin Lyons becoming executive chairman."TCS has a market leading corporation tax software platform established over the past 25 years which is used by a large number of the UK's leading companies and accountancy practices," Lyons said."We will invest in the excellent product portfolio, making it even more relevant to our valued customer base."We aim to accelerate the organic growth of the business whilst seeking opportunities to acquire companies with complementary products and services," Lyons explained.