K3 continues on its ascent

Reseller K3 has turned the channel on its head with its £6.6m acquisition of ERP distributor Information Engineering Group (IEG)

Under the terms of the deal, the Manchester-based VAR has agreed to pay £3.81m for IEG together with deferred consideration and earn-out arrangements worth £2.25m.

IEG distributes Syspro’s manufacturing and financial ERP software, as well as value-added services in project management, implementation consultancy, training and support.

David Bolton, finance director at K3, told CRN that the acquisition could eventually see the VAR move into the distribution space.

“We will keep with Syspro , but lose the IEG name. There are unlikely to be any redundancies. We will make only minimal changes,” he said.

IEG is K3’s fourth acquisition in 15 months. It bought Microsoft business solutions firm Alpha Landsteinar for £7.2m in October, software distributor Elucid in April last year for about £900,000, and warehousing and distribution management software firm PSE in November 2003.

K3 was appointed as a Microsoft strategic ISV partner in February last year . The VAR sold its enterprise systems division to the Azur Group for £2.55m in March last year.

James Calvert, an analyst at Regent Associates, said: “This is yet another example of consolidation in the market. K3 seems ambitions, and it is quite likely to grow through acquisitions.”