Warrington-based IT firm Adept4 has agreed a £6.1m deal to buy Leeds technology business CloudCoCo.
Adept4 has called a general meeting on 21st October to seek approval for both the acquisition and for a change of name to CloudCoCo Group. The purchase would be funded by convertible debt, exchangeable immediately upon completion for 218,160,586 ordinary shares in the enlarged company. This would represent approximately 49% of total shares.
A debt refinancing agreement will see investor MXC buy Adept4 loan notes worth £3.5m from the Business Growth Fund, which has agreed to cancel its remaining £1.5m loan notes.
MXC already has a 29.9% stake in Adept4 and 10.6% of CloudCoCo. Andy Mills, chairman of CloudCoCo, would become chief executive of the enlarged group.
Simon Duckworth, non-executive chairman of Adept4, said: “We are proposing to acquire a business which has expanded rapidly since establishment and, by harnessing CloudCoCo’s proven and experienced salesforce with our existing operations, we believe there is a clearly defined opportunity to return Adept4 to growth.”
In the six months to March, Adept4 made a post-tax loss of £1.1m on revenues of £4.2m and in April it lost a contract which had been worth £700,000 in the previous year. Its market value has dropped below £1m, when three years ago it was valued at £20m.
CloudCoCo is a cloud, IT hardware, and IT services company, based in Leeds city centre.