IDE Group confirms sale of Connect business to CloudCoCo
Connect and Nimoveri Limited bought for a consideration of £250,000
CloudCoCo has acquired IDE Group's loss-making Connect business for a deferred consideration of £250,000.
IDE Group announced in September that it was in "advanced talks" to sell off its networking and connectivity subsidiary, which had sales of £6.3m for the first half of 2021 but made an operating loss of £1.4m.
The acquisition also includes IDE's Nimoveri Limited business - an IT MSP which it acquired in June this year.
CloudCoCo, which earlier this week released a financial update forecasting increased revenues and profits for 2021, claims it has "identified a number of immediate steps that can be implemented to help drive profitability across the enlarged group".
As part of the transaction, IDE Group will provide CloudCoCo with "a working capital facility of up to £500,000 to help fund the initial restructure of the IDE Group Connect business". The amounts drawn will then be convertible into new ordinary shares of CloudCoCo at 1p per share if not repaid by 19 October, 2022.
" The acquisition of IDE Group Connect and Nimoveri is truly transformational for CloudCoCo and provides us with the scale required to target bigger customers with larger budgets, as well as serving as a great catalyst for future expansion," CloudCoCo CEO Mark Halpin said.
"Together, the acquisitions will almost double our current annualised revenues to around £27m and take our customer base to more than 1,000, with a multitude of new sales opportunities across the board including enhanced private, hybrid and multi-cloud transformation projects through the addition of customer infrastructure in 33 data centres.
"We have demonstrated our ability to reset, recover and grow businesses of this nature by keeping things simple, and we are confident we will be able to replicate the success of the past couple of years with the acquired businesses."
The acquisitions will also provide CloudCoCo with circa 660 additional clients, it claims, adding that its immediate focus will be to "improve customer retention, increase sales, reduce costs and ultimately generate meaningful profits".
It comes after IDE Group claimed that it had become a "meaningfully profitable company with excellent prospects" as a result of the sale of Connect after "three long years" of trying to turn the business around.