Takeover planned for £6m turnover IT group

CloudCoCo, a listed provider of IT and communications solutions to businesses and public sector organisations, intends to acquire Sheffield-based IT group Systems Assurance Ltd.

The net consideration for the acquisition is £0.83m in cash (£1.58m gross), subject to adjustment, and the grant of warrants over four million Ordinary Shares.

For the year to 31 December 2020, Systems Assurance generated revenue of more than £6m and an adjusted EBITDA of £209,000.

The Systems Assurance Group was founded in 1992 and seeks to cut customers’ overall spending on IT hardware and services by providing global bids on its customers’ hardware and services’ requirements directly with the suppliers.

The Group comprises two businesses based in Sheffield – Systems Assurance and More Computers.

CloudCoCo, which has offices in Leeds and Warrington, says the deal will introduce a proven hardware engine into its existing business, as well as expand its IT managed service offering, which will help increase operational efficiency and drive margins.

And it adds: “The e-commerce division of Systems Assurance will increase the purchasing power of the enlarged group and broaden its product range, as well as streamline its current processes and offer greater efficiency and margin accretion through automation.

“The proposed acquisition will increase CloudCoCo’s customer base and provide the opportunity for cross-selling and upselling of its services.”

CloudCoCo has raised £2.1m before expenses through a conditional placing arranged by Allenby Capital of 210,000,000 new ordinary shares at a price of one pence per share. The placing will fully fund the acquisition of Systems Assurance.

Mark Halpin, chief executive of CloudCoCo, said: “This placing and acquisition is set to be a transformative step forwards for CloudCoCo.

“It sees us progress to the next stage in our development – ‘Get Bigger’ – which will see us focus on scaling the business while winning larger and longer contracts.

“I would like to welcome the Systems Assurance team to the fold.

“They bring with them fantastic technology and an impressive customer base that not only complement the existing CloudCoCo business but will help unlock its potential through driving substantial efficiency gains and introducing new cross-selling opportunities.”