K3 sells managed services unit for £14.7m

Node4 is new owner of Starcom Technologies

AIM-listed K3 has sold its managed services unit to private equity-backed Node4 for £14.7m.

The unit, named Starcom Technologies, generated £10.2m in revenues and logged pre-tax profits of £1.2m for K3 in unaudited results for its financial year ending 30 November 2020.

Starcom's team and 280 customers will also transfer to Node4 with the sale, and it will continue to provide K3 with managed services for at least three years.

In a note to the London Stock Exchange announcing the sale, K3 stated that the disposal of Starcom "significantly strengthens" its balance sheet. Last year it closed down its Microsoft Dynamics business to boost its liquidity position.

"Node4 is an excellent new home for Starcom with its focus exclusively on managed services, and the deal enables us to accelerate our strategy of growing own IP product revenue. We wish Starcom great success for the future," stated Adalsteinn Valdimarsson, CEO of K3 Business Technology Group.

Node4 ranked 79 in CRN's Top VARs 2020 with revenues of £51.8m. K3 came in at 51 on the same list with overall revenues of £78.4m.

Node4 is backed by private equity firm Bowmark Capital.

"We are excited to be working with the Starcom team and their customers, with our shared mission of helping businesses with cloud-led managed services," stated Andrew Gilbert, CEO of Node4.

"We would like to thank K3 for working with us during the acquisition and are looking forward to continuing the relationship by providing industry-leading managed services."