FD Technologies Regulatory News (FDP)

15 Sep 2008 07:00

15 September 2008

First Derivatives plc 

(AIM:FDP.L, IEX:GYQ.I)

Acquisition of Market Resource Partners

The Board of First Derivatives plc ("First Derivatives" or the "Company") announces that it has acquired Market Resource Partners LLC ("MRP"), a US based technology marketing company headquartered in Philadelphia, PA, for a total consideration of up to $20 million (£11.3m) (the "Acquisition"). The Acquisition comprises an initial cash payment of $4.5m (£2.5m) and a further $1.5m (£0.8m) through the issue of 436,644 First Derivatives new ordinary shares (the "Consideration Shares"). An additional deferred consideration of up to a maximum of $14m (£7.9m) (will be payable, subject to MRP achieving certain profit goals during the two years ending 31 August 2010. The initial cash consideration will be financed from the Company's existing bank facilities.

Founded in 2002, MRP specializes in the strategic development and tactical execution of marketing and sales programs for software and technology service firms. Utilizing MRP's strategic consulting and predictive analytics, clients are in a position to make more informed decisions leading to immediate and longer term sales opportunities. MRP's clients comprise technology firms, Independent Software Vendors and channel resellers including Microsoft, Sun Microsystems and Cisco Systems. MRP employs 95 people in its office in Philadelphia, PA.

MRP achieved an EBITDA of $838,000 (£474,000) in the 12 months to 31 December 2006 and EBITDA of $335,000 (£190,000) in the 12 months to 31 December 2007 after adjusting for one-off costs of $163,000 (£92,000) from relocating their head office. In the six months to 30 June 2008 MRP achieved EBITDA of $653,000 (£369,000). The vendors have warranted that MRP's net assets as at 31 August 2008 (the effective date of the transaction) were not less than $200,000 (£113,000).

The Acquisition enhances First Derivatives presence in its largest market and will help accelerate the Company's expansion into the US by enhancing its global support offering. MRP will also provide another channel to market, for the Company's products, not only to the financial sector but also to other market segments.

The Consideration Shares will rank pari passu with the Company's existing ordinary shares. Application will be made for the Consideration Shares to be admitted to trading on AIM and the IEX and dealings are expected to commence on 19 September 2008. Following Admission the enlarged issued share capital of the Company will be 13,720,468 Ordinary Shares.

First Derivatives' CEO Brian Conlon said: "MRP is one of the leaders in its field and the continuing loyalty of its customer base, which is a roll call of the world's leading technology firms, is testimony to the quality of service it provides. This transaction represents a coming together of two very like minded firms with a mutual emphasis on professionalism and customer-driven innovation.

This Acquisition gives us access to an established team of world class technology marketing professionals. We have invested significant resources in R&D and this accelerates our channel to market particularly in the U.S. and into sectors other than investment banking. The investment will also provide a springboard for establishing a greater presence in the US market and will enable us to replicate our successful nearshore model in North America"

Kevin Cunningham of MRP said "We are excited about the opportunities that this transaction provides for MRP, our clients, and our employees. It allows us to accelerate the build out of our technology infrastructure and analytic capabilities, giving us the operational scale to meet our increasingly complex client needs. It also enables us to expand further our European operations and expertise in the financial technology sector, opening up new, more diverse business opportunities for MRP."

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