K3 buys Panacea for £1.7m
SOFTWARE group K3 Business Technology has acquired Hampshire-based IT company Panacea from Isis Equity Partners.
The Salford-based company, which bought a string of companies earlier in the year, said it had paid £1.7m for the business and agreed to pay off its £500,000 overdraft.
The deal represents a loss for Isis which invested £6.2m from its Manchester office as part of a management buyout in 2006.
AIM-listed K3 supplies and supports Microsoft-based enterprise resource planning (ERP) software – a system that manages everything from stock to till sales.
It said the acquisition represented “a material development in the growth of its managed services and hosting activities”.
Panacea provides managed services and IT solutions to the distribution, retail and hospitality sectors. For the year to December 31, 2008, it generated sales of £9.58m and an underlying operating profit of £570,000.
Some 47% of annual revenues are recurring and for 2008 totalled £4.5m, from a customer base of approximately 260, including many high street retailers. K3 said the addition of Panacea more than doubles its existing managed services revenues.
Chief executive Andy Makeham said: “Panacea not only more than doubles the size of, and extends, our existing hosting and managed services business but also brings us recurring income from a large, high quality customer base.”
The deal was led by Richard Faulkner and Peter Lowe from Barclays Corporate while Clearwater advised the vendor Isis Private Equity.
Between March and June K3 completed three acquisitions worth nearly £5m – cloud computing firm Digimis, Pebblestone Netherlands, an ERP specialist for the fashion industry, and Pebblestone IP.
