(Alliance News) - K3 Business Technology Group PLC on Friday announced it has sold its subsidiary Starcom Technologies Ltd to infrastructure and services company Node4 Ltd for GBP14.7 million in cash.
The Manchester-based enterprise software company said the transaction, which included GBP500,000 cash on the balance sheet, will generate a "significant" profit on disposal in excess of GBP10 million. This will strengthen its balance sheet to eliminate debt, it added, of which it had GBP2.3 million as at November 30, down slightly from GBP2.4 million in 2019.
K3 Business Technology said Starcom's management team and staff have transferred over as part of the sale, along with its 280 customers. Starcom will continue to provide K3 Business Technology and its customers with managed services for at least three years, it added.
Shares in K3 Business Technology were up 18% at 155.50 pence in London on Friday.
For its financial year ended November 30, Starcom generated GBP10.2 million in revenue and pretax profit of GBP1.2 million, while its net assets stood at GBP2.5 million.
"Node4 is an excellent new home for Starcom with its focus exclusively on managed services, and the deal enables us to accelerate our strategy of growing own IP product revenue," said Chief Executive Adalsteinn Valdimarsson.
K3 Business Technology said it will release its results for its financial year ended November 30 on March 30.
By Zoe Wickens; zoewickens@alliancenews.com
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K3 Business Technology Group (KBT)