RedstoneConnect expands managed IT with £2.4m acquisition

RedstoneConnect, a provider of technology services for smart buildings and commercial spaces, has acquired Commensus, a provider of managed IT services, for £2.4m.

The AIM-listed company said the acquisition provided a further opportunity to cross-sell to existing clients, as well as a complementary fit with its existing trading divisions, Redstone and Connect IB.

It is also part of the company's growth strategy as Commensus serves 72 clients globally, to develop higher margin recurring revenues and greater visibility of earnings.

Of the £2.4m, about £2.25 is payable in cash, funded from the company’s resources and bank debt, and £147,710 will be paid on the issue of about 11.9m shares in RedstoneConnect to Kevin London and Alex Parker, both senior management of Commensus , on completion.

Commensus, which is expected to be earnings enhancing in its first year of ownership, made revenues of £3.2m and earnings before interest, tax, depreciation and amortisation (EBITDA) of £338,000 for year ended 31 December 2015.

Chief executive Mark Braund said: "Commensus will enable us address a gap in our existing services offering in our RedstoneConnect business. RedstoneConnect has undertaken a significant shift in both strategic and operational direction over the last 12 months and the acquisition of Commensus is further evidence of our ambitions to deliver compelling service solutions across our client base."

Shares RedstoneConnect were up 1.82% to 1.40p at 1002 GMT.