Tech business to be acquired in £6m deal
A deal has been agreed for Leeds-based technology business CloudCoCo to be bought for £6.1m by stock market-listed Adept4.
The agreement, which is subject to shareholder approval, would result in significant changes for Warrington-based Adept4.
A debt refinancing agreement will see tech investor MXC buy Adept4 loan notes worth £3.5m from Business Growth Fund (BGF), which has agreed to cancel its remaining £1.5m loan notes. MXC already had a 29.9% stake in Adept4 and a 10.6% stake in CloudCoCo.
CloudCoCo chairman Andy Mills would become chief executive of the enlarged group, which will change its name to CloudCoCo Group.
Simon Duckworth, non-executive chairman of Adept4, described the acquisition and refinancing agreements as “positive developments as we seek to recover value for our shareholders”.
Adept4’s shares had become practically worthless in the summer, with the company’s market value dropping below £1m. Its shares were priced at just 0.35p, after a three-year decline from nearly 10p which valued the company at around £20m.
Duckworth added: “We are proposing to acquire a business which has expanded rapidly since establishment and, by harnessing CloudCoCo’s proven and experienced salesforce with our existing operations, we believe there is a clearly defined opportunity to return Adept4 to growth.”
The Leeds company is only two years old, having been created by the former sales directors of Harrogate IT company Redcentric.
CloudCoCo is a cloud, IT hardware, and IT services company, based in Aire Street in Leeds city centre. Adept4 already has a West Yorkshire office in Liversedge, as well as an Aberdeen site.
Adept4 has been hit by economic uncertainty in the market, while investment in a new sales team during the previous financial year has not delivered the expected results.
In the six months to March, Adept4 made a post-tax loss of £1.1m on revenues of £4.2m and in April it lost a contract which had been worth £700,000 in the previous year.
Investor MXC will provide an additional two-year working capital facility of up to £0.5m, with an interest rate of 12%, when the CloudCoCo acquisition completes.
