K3 Business Technology Group Regulatory News (KBT)

3 Sep 2007 07:01

K3 Business Technology Group PLC03 September 2007 KBT.L K3 BUSINESS TECHNOLOGY GROUP PLC ("K3" or the "Company") Announces Acquisition of Retail Software Company Landsteinar Nederland BV K3 Business Technology Group plc, the IT solutions provider to the supply chainsector, is pleased to announce the acquisition of the entire issued sharecapital of Landsteinar Nederland BV ("Landsteinar"), the Holland-based retailsoftware solutions business, for an initial consideration of £9.87m (€14.5million) to be satisfied by a mix of cash and shares, and a furtherconsideration of up to £3.74m (€5.5 million) to be paid through an earn outarrangement linked to Landsteinar's performance to 31 August 2009. Landsteinar, which has offices in The Hague, was established in 2001 and is aleading distributor of Microsoft-based retail software solutions. It also holdsthe worldwide rights to software modules specifically designed for Inter IKEASystem B.V. ("IKEA"), the global home furnishings business. Landsteinar has astrong domestic and overseas customer base, with over half its customers basedoutside Holland. In total, the business has some 40 customers, supporting 300stores across 12 countries. For the year ended 31 December 2006, Landsteinarreported turnover of €6.1m and a profit before tax of €2.2 million. As at 31December 2006, the net assets of Landsteinar were €1.93m. The Directors of K3expect the acquisition to be immediately earnings enhancing. In 2004, K3 acquired retail software provider, Alpha Landsteinar Limited, whichnow comprises the Group's Retail Software Division and the acquisition ofLandsteinar Nederland is considered by the Company's Board to be entirelycomplementary since both companies market and support the same MicrosoftDynamics based retail software solution. Landsteinar's key management will beretained following the completion of the acquisition to help exploit existingopportunities and to assist with the development of other areas of K3's retailsolutions. The initial consideration is satisfied by £7.40m of cash and the issue of 1.6million ordinary shares of 25 pence each in the capital of K3 ("OrdinaryShares") at 153 pence per share. Admission of the Ordinary Shares to trading onAIM is expected to take place on 6 September 2007. K3's banker, Barclays Bankplc, is providing debt funding to support the acquisition of Landsteinar. Underthe terms of an earn out agreement with the seller, depending on the growth inLandsteinar's EBITA over each of the two 12-month periods between completion and31 August 2009, further consideration of up to £3.74m (€5.5 million) will bepaid. The Directors intend to issue K3's interim results for the six months ending 30June 2007 on Friday, 7 September, in advance of which an announcement will bemade of the impact of the adoption of International Financial ReportingStandards on historical results. Andy Makeham, Chief Executive of K3, said "The acquisition of Landsteinar is a compelling one for us since it is highlycomplementary to our existing Retail Software business. The Retail SoftwareDivision already supports retail customers in over 18 countries, and theacquisition of Landsteinar will extend this footprint to over 30. Theacquisition provides very attractive synergies as we sell the same softwareproducts. Additionally, the markets in which both companies operate fit togetherwell. Landsteinar has a strong presence in the Fashion and Home Retail sectors,which are key growth markets for us. We believe the exchange of experience and resource across both businesses willbe of enormous value to the continuing growth and development of each company.We expect to achieve significant growth in the Landsteinar business over thecoming years and to benefit immediately and in the longer term from theprofitability of this unit." For further information: K3 Business Technology Group plc Today: 020 7448 1000Andy Makeham, Chief Executive Thereafter: 01282 864 111David Bolton, Chief Finance Officer Daniel Stewart & Company Plc (Nominated Adviser) T: 020 7776 6550Paul Shackleton Biddicks T: 020 7448 1000Katie Tzouliadis Notes to Editors: K3 provides market-leading, Microsoft-based software solutions to mid-tierretailers and manufacturers. The Group's strategy has been to build a balancedbusiness model, with exciting growth prospects offered by the Retail SoftwareDivision and strong recurring income (from annual licence renewals) generated bythe Manufacturing Software Division. By focusing on Microsoft-based softwaresolutions, K3 has benefited from Microsoft's substantial investment inmid-market enterprise software. K3 is a member of Microsoft's Inner Circle,which is reserved for its top 60 sales partners worldwide. Retail Software Division - K3 is Microsoft's leading reseller of Dynamics(formerly Navision) software in the UK. The Group recently established sectorspecific business units to address specialist niche markets within the retailsector. These include: Food, Drinks/Breweries, Household Goods and Fashion. This"verticalisation" strategy enables the Retail Software Division to market itselfas a specialist within its chosen retail markets. Manufacturing Software Division - K3 has the largest manufacturing customer basein the UK. This has enabled the business to develop a very close relationshipwith Microsoft. The Division is a reseller of SYSPRO products, which is theacknowledged market-leading software for mid-market manufacturers. In March2007, K3 acquired the only other SYSPRO distributor in the UK, McGuffie Brunton,for £12.5m in cash and shares. The Company believes that the potential for thecombined business is significant. This information is provided by RNS The company news service from the London Stock Exchange