Property firm swoops for data centre engineering and technology company in £9.5m deal

MANCHESTER-based services company Styles & Wood has acquired critical facilities and data centre services provider Keysource Ltd for about £9.5m.

The deal is for an initial consideration of £2m to be satisfied in cash and shares with an additional payment to reflect any excess working capital of £2.5m.

This payment will covered in cash inherited in Keysource at the completion date.

There will be a potential further deferred consideration of up to £5m, to be satisfied in cash and shares, subject to the achievement of certain financial performance criteria over the three-year period ending December 31 2018.

The listed company, which on Monday announced it had nearly doubled its half-year profits, said the acquisition is in line with Styles & Wood’s strategic focus on diversifying its service offering across key sectors.

It enhances the group’s service line capabilities in technologies and critical facilities, including data centres as well as providing new opportunities to broaden work streams to both existing and new customers.

The overall market for data centres is forecast to reach more than £1.1bn by the end of 2020, it said.

The acquisition is being funded from the group’s existing financial resources.

Based in Horsham, Sussex and incorporated in 1998, Keysource currently employs more than 60 staff and claims to be one of the UK’s leading critical facilities and data centre services providers.

The company specialises in delivering engineering and technology services and solutions for customers in their business critical environments.

Its management team has more than 30 years’ experience working with some of the world’s leading organisations to support critical applications and facilities across a diverse range of sectors, including commercial, banking, education and industrial.

In the audited financial year ended  December 31 2015, Keysource delivered revenues of £18.7m and underlying pre-tax profits of £0.1m. Net assets as at December 31 stood at £2.2m.

As part of the Acquisition, all Keysource employees will remain employed by Keysource Limited which will be positioned within Styles&Wood Group.

Styles & Wood chief executive Tony Lenehan said: “We are delighted to announce the acquisition of Keysource. The data centre market is a sector we have been looking to access for some time and believe it has strong growth prospects driven by a combination of macro and regulatory factors.

“The acquisition follows our successful consortium arrangement with Keysource on an ongoing major banking framework and we have been very impressed with the team’s expertise and project delivery capabilities.

“Styles & Wood has a proven diversification strategy which has strengthened our client relationships across our focus sectors.
 
“This acquisition further reinforces our strategic vision and will enable us to widen our service offering to both existing and new customers and create new sustainable business opportunities for the group as a whole.”

EY’s Richard Harding and John Williams provided financial and tax due diligence advice.

Jonathan Gillow at Hill Dickinson (Jonathan Gillow) provided legal services and the Quinn Partnership provided management due diligence.