K3 老九品茶 Technology Group has reached an agreement to sell its NexSys Solutions subsidiary to global ERP software provider SYSPRO for 拢36 million in cash.
K3, headquartered in Manchester with offices around the world, provides 鈥榤ade-to-measure鈥� software solutions for the fashion and retail industry. The firm serves more than 3,000 customers across 20 countries but reported a drop in revenue to 拢15.5m for the six months to 31st May 2024, compared with 拢20.3m in the corresponding period last year. However adjusted operating loss improved significantly to 拢1.2m (2023: loss of 拢1.8m).
The deal, which is expected to complete by January 8th 2025, comes after a strategic overhaul of K3鈥檚 operations, designed to simplify the business and focus on cash generation.聽
NexSys, a SYSPRO elite partner in the UK, will become part of SYSPRO鈥檚 wider global business, expanding its presence in the UK and Europe.
NexSys, also headquartered in Manchester, has over 40 years of experience providing ERP solutions to manufacturers and distributors. The subsidiary, which employs around 80 people, has been a key component of K3鈥檚 third-party solutions division, generating 拢12.1m in revenue and 拢3.8m adjusted EBITDA in the year to 30th November 2023.
The sale represents a 28.8% premium to K3鈥檚 market capitalisation, which stood at 拢28m on Friday.
Eric Dodd, CEO of K3 老九品茶 Technology Group, said: “As the UK and Ireland’s largest reseller of SYSPRO software, our NexSys business is a superb fit for Advent. Advent has the resources and market experience to more fully capitalise on NexSys’s strategic value.鈥�
A substantial portion of the 拢34.4m in net proceeds will be returned to K3 shareholders in the first half of 2025. The remainder will be retained for working capital and potential restructuring.
The proposed sale is subject to approval from K3鈥檚 shareholders at a general meeting scheduled for 19th December 2024.
Jaco Maritz, CEO of SYSPRO, said: “The carve-out acquisition is a key milestone in Safari’s SYSPRO strategy to expand its global footprint, strengthening its presence in the UK and extending its reach across Europe. The acquisition will also enable SYSPRO to expand its highly regarded digital manufacturing suite with new products and capabilities.
“Safari believes there are further initiatives that would help accelerate its existing strategy and which it intends to confirm after a detailed review of the business and operations following Completion.聽 Safari and SYSPRO attaches great importance and value to the skills, experience and commitment of the existing management and employees of NexSys.”