Fujin owners on target for £2.5m payday

Redstone reveals the Brocade reseller it acquired last year is on course to beat its earn-out targets

The former shareholders of VAR Fujin are on target to net the £2.5m payout they were promised if they hit their earn-out target, new owner Redstone has revealed.

Redstone acquired Brocade partner Fujin for up to £2.9m last November but the deal comprised only £400,000 upfront.

To provide incentives for Fujin's management, Redstone agreed to shell out a further £2m in shares and £500,000 in cash if its conquest achieved a pre-tax profit of £560,000 for the year to 31 October 2011. If the target is not hit, the amount payable will be adjusted to provide for a reduction of approximately £10 for every £1 of shortfall in profit.

In a stock exchange announcement this morning, Redstone said it believed Fujin is likely to exceed that target.

Redstone, which has scored a brace of eight-figure deals in the past month, also said trading for its year to 30 September is in line with expectations.

Redstone chief executive Tony Weaver said: "The Fujin acquisition was one of the first major steps we took in the restructuring of the Redstone business, and as such we are delighted with Fujin's performance under Redstone's ownership.

"The acquisition of Fujin has provided a high level of cross-selling opportunities in 2011 and is an important component of Redstone's improved trading."