Ian Smith, the channel M&A impresario behind the likes of Matrix, Xploite and Accumuli, is set to embark on another buy-and-build project using the proceeds from the sale of Redstone's core activities.
The Redstone brand is finally set to vanish - at least in the capacity of an indepdendent company - after the once-mighty VAR announced this morning that it is selling off the bulk of its remaining business for £9.5m.
Coms, a fellow London-listed outfit focused on cloud telephony, has agreed to buy Redstone's Communica business, which focuses on ICT infrastructure, datacentre and cabling and turned over £30.8m last year.
Redstone's remaining activities – which comprise two small software businesses with a combined turnover of £2.8m – will now be renamed as Castleton Technology and bolstered via M&A, pending shareholder approval.
The announcement marks the death of a Redstone PLC brand that was one of the comms channel's true goliaths last decade, with annual revenue at one stage nudging £200m (Coms will continue operating the Redstone Converged Services brand). After almost folding in 2010 after financial issues forced it to the brink of bankruptcy, Redstone earlier this year split into two separate companies as it hived off its higher-margin managed services activities into a new venture called Redcentric.
Redstone's management claimed that the opportunity to grow the remaining infrastructure services business could best be exploited if it became part of a larger, communications-focused business.
Coms has agreed to cough up £7.65m cash on completion and a further £1.85m 12 months later.
Smith, who is Redstone's chief executive and whose MXC Capital Advisory also advised on the deal, said the disposal marks the end of a restructuring phase that began on his appointment in 2010.
"We believe that the disposal offers a fair price for our shareholders while offering Coms an opportunity to build upon the restructuring work completed under our management," he said.
Redstone – or Castleton as it will now be known – will retain ownership of two software consultancy business that were formerly subsidiaries of Maxima, which Redstone acquired last year. These are Glasgow-based MIG, which makes ERP, reservation and ticketing and payroll software products, and Cheltenham-based software consultancy QAD.
Smith and his fellow management said the proceeds will be used to seek further acquisitions within the technology sector. Following the Communica disposal, Castleton will have £3m in cash to play with, not including the £1.85m deferred sum.
David Breith, chief executive of Coms, described Redstone's ICT business as a "quality operator" with a well-recognised brand and blue-chip client base to which Coms can punt its broader suite of services.
"This will be the seventh acquisition since I became chief executive of Coms and I am pleased to report that we are well on our way to delivering our strategy of becoming a full service communications and ICT business," Breith added.
The move will be put to shareholders on 21 November.
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