LMS Capital PLC Sale of Majority Stake in 365IT to CORETX (7339B)
April 06 2017 - 2:00AM
UK Regulatory
TIDMLMS
RNS Number : 7339B
LMS Capital PLC
06 April 2017
LMS CAPITAL PLC ("LMS" or the "Company")
Acquisition by CORETX Holdings PLC ("CORETX") of the Company's
investment in
365 ITMS Limited ("365IT")
LMS is pleased to announce the sale of its majority stake in
the, leading UK IT services business, 365IT, to CORETX Holdings plc
(AIM : COR) the mid-market network, cloud and IT managed services
provider.
-- Acquisition by a strategic buyer allows 365IT to accelerate its value creation;
-- LMS can continue to participate in future growth through its shareholding in Coretx;
-- The terms of the transaction represent a premium to the net asset value;
-- Gresham House Asset Management Limited ("GHAM"), Investment
Manager of LMS was instrumental in facilitating, developing and
executing the transaction.
Under the terms of the acquisition the enterprise value of 365IT
was agreed at GBP5.4m, which after adjusting for net debt of
GBP800k results in an equity value of GBP4.6m, to be settled
through a combination of cash and shares.
LMS' share of the equity value is GBP4.1m. LMS has received
gross cash proceeds of GBP1.1m plus 9,826,400 shares in CORETX
having a value of GBP3m based on a price of 30.5 pence per share
being the average closing mid-price for the month of March 2017.
This shareholding represents 4.9% of the enlarged undiluted share
capital of CORETX. The market value of the shares based on the
closing price on 5 April is GBP3.1m. The shares are subject to a
24-month orderly market agreement.
365IT is an established IT managed services provider, with
particular expertise in voice and unified communications, and a
services portfolio that includes private cloud, contact centre
solutions, connectivity, collaboration and security solutions and
training. LMS initially invested in 365IT in 2011. In April 2016,
365IT completed the acquisition of Deverill Group Limited which it
has successfully integrated. During the second half of 2016 the
company experienced a downturn in its core business reflected in
its financial performance which reduced the valuation of its
investment to GBP2.1m at 31 December 2016.
The acquisition by CORETX represents a strategic opportunity for
365IT to accelerate value creation. The acquisition is highly
complementary on both a product and service level, and will provide
the 365IT business with the benefits of scale and a wider customer
base to whom a broader range of technical products and services can
be offered.
Through its equity position in CORETX, LMS has the opportunity
to create further value. The CORETX strategy is to consolidate the
fragmented IT services market, with the aim to acquire high quality
relevant products and services to fulfil the technological needs of
its enlarged customer base. This could enable LMS to potentially
realise a significant premium to its carrying value and therefore
further enhance shareholder returns.
In August 2016, Gresham House Asset Management ("GHAM") took
over the management contract of LMS. GHAM has taken an active,
hands on approach with the portfolio to optimise shareholder value.
GHAM has also taken positions on the boards of the UK investments,
including 365IT. GHAM's involvement was instrumental in
facilitating, developing and executing the transaction.
Tony Dalwood, LMS Investment Committee member, commented:
"We are delighted to have achieved this outcome for LMS. It
accelerates the longer-term benefits of scale for 365IT and, in
addition to providing additional liquidity, offers LMS the
opportunity to benefit from the future growth of the enlarged
CORETX business."
Enquiries:
Gresham House Asset Management 0203 837 6270
Tony Dalwood
This information is provided by RNS
The company news service from the London Stock Exchange
END
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