Redcentric acquiring Piksel IS in $13m deal

Managed IT services company Redcentric announced the acquisition of Piksel Industry Solutions on Thursday, for $13m (£9.5m).

The AIM-traded firm said the acquisition would “significantly” enhance its service offerings in both public cloud and security, adding that it had a “complementary” customer base, with good cross-sell opportunities.

Annualised synergies of at least £1.1m were anticipated, with the acquisition expected to be immediately earnings-enhancing.

Consideration for the acquisition was $13m, payable in cash funded entirely from existing cash resources.

Redcentric described Piksel IS as a provider of IT modernisation and digital transformation services, focussing on public cloud.

It also delivers security and IT managed services, and had a “strong” application development and DevOps capability.

Based in York and London, Piksel IS has 93 employees, the majority of which are “highly-skilled” technical individuals.

It said its managed IT services were provided across a range of industry verticals, with a particular focus on Amazon Web Services and Microsoft Azure.

Of the consideration, $12m was payable immediately, and $1m would be held in escrow for a period of 12 months.

On a proforma basis, the acquired business was expected to generate annualised revenues of £10m and EBITDA of £0.4m.

As at 31 July, Piksel IS had net assets of £2.2m, including an assumed intra-group debtor of £3.1m which would be written off immediately after the acquisition, while cash on the balance sheet stood at £0.3m.

“This is an extremely exciting strategic acquisition for Redcentric and combines the secure, asset light, digital transformation capabilities of Piksel IS with the managed infrastructure, unified communications and connectivity solutions of Redcentric,” said chief executive officer Peter Brotherton.

“We are delighted that the combined portfolio will accelerate the Redcentric group's ability to deliver industry leading, transformative solutions to our customers and expands our capabilities in hyperscale public cloud and security.”

At 1513 BST, shares in Redcentric were up 1.46% at 139p.