K3 buys software business

Enterprise resource planning software provider K3 Business Technology is acquiring the Sage 200 business of FD Systems for £1.25m in cash. The Sage Line 200 suite of business management software provides enterprise resource planning for small and medium?sized companies. The business generates annual revenues of £2.35m and two-fifths of this is recurring. The profit contribution is around £500,000. There are 330 customers.AIM-quoted K3 already has Sage 200 interests following its earlier acquisition of managed services provider Panacea and it intends to integrate the operations. The plan is to offer managed services to the clients being acquired. Edison Investment Research estimates that the acquisition will add 25 to earnings per share in the year to June 2011 and 4% in a full year. Edison forecasts a profit of £8.2m and earnings per share of 23.7p in 2010-11. The business is cash generative but the cost of the acquisitions so far this year means that net debt is expected to rise to £12.8m by the end of June 2010.