Shearwater to buy cyber security solutions group Brookcourt for £30.3m

AIM-listed digital resilience group Shearwater said on Friday that it has agreed to buy cyber security solutions company Brookcourt Solutions for £30.3m, as it announced a placing of up to £30m and an open off of up to £1m to fund the deal and provide additional working capital.

Established in 2005, Brookcourt specialises in the provision of cyber security and network solutions within complex, advanced threat landscapes to UK-based corporate and public sector customers. For the year to the end of March 2017, Brookcourt generated unaudited revenue of £22.2m and earnings before interest, taxes, depreciation and amortisation of £2.8m.

Shearwater said the deal was "transformational" as it substantially broadens its security solutions and services capability, facilitating access to a complementary, large enterprise client base.

In addition, it creates a strong platform to drive organic and acquisitions growth, within a fragmented cyber security services and solutions market. It also gives the group access to a "highly experienced" management team remaining with the company to lead the expansion of Brookcourt, and support the further development of the business into cyber security and managed service solutions.

The total consideration of £30.3m comprises £22.95m in cash and £7.35m in shares and Shearwater said it was planning to raise the funds through a placing and open offer.

Shearwater chairman David Williams said the acquisition provides the company with a substantial platform from which it can grow organically and by further acquisitions.

"One of the key elements of our buy and build strategy is that the management teams stay with the business and become active parts of the enlarged group - I am therefore delighted that Phil, Dene and the Brookcourt team are joining us.

"As well as being strategically and operationally a major development for us, this transaction will also bring a step change in our scale and breadth of offering, and notably it will make us cashflow positive following completion."

Brookcourt co-founder and chief executive officer Phil Higgins said: "We had a number of options to develop and grow our business, but were very much drawn to joining Shearwater owing to our shared vision and the real opportunity to be part of a rapidly growing PLC. This unity provides us with the resources, additional industry expertise and support to scale the business in delivering a broader solutions offering to our existing and prospective customers.

"We are delighted to be joining Shearwater at such a pivotal time in Brookcourt's development and we very much look forward to realising our ambitions for the business as part of the wider group."