CFA Society Singapore
SINGAPORE (Nov 19): Procurri Corporation is acquiring the remaining 49% stake it does not already own in US joint venture (JV) company, Rockland Congruity, for US$22 million ($30.2 million).
The consideration is to be paid in two tranches, with US$12 million due upon completion of the purchase, and another US$10 million in Jan 2020.
Procurri intends to fund the acquisition using internal resources and/or bank loans.
Rockland Congruity was established in Jan last year between Procurri and US-based IT solutions company Congruity, with Procurri’s intention being to develop a stable income stream and in-house maintenance capabilities through Rockland.
Under that JV agreement, the group has an option to acquire the remaining 49% stake in the JV from Congruity should the JV company’s net profit after tax be equal to, or exceed, US$3 million by FY18.
In a Sunday filing, Procurri says it is now exercising this option as Rockland has generated revenue of US$28.3 million and deferred revenue of US$7.5 million for 9M18 – up from US$24.1 million and US$7.2 million, respectively, for the whole of last year.
The group says its move will strengthen its lifecycle services business segment.
According to Procurri chairman and global CEO Sean Murphy, turning Rockland into a wholly-owned subsidiary will “sharpen [Procurri’s] competitive edge at a time when its peers in the third-party IT maintenance industry are rapidly scaling up through mergers and acquisitions to increase market share".
“Besides improving decision-making efficiency, full integration will enable us to compete more effectively in the current business environment,” says Murphy.
“This is important as companies worldwide are increasingly turning to service providers that can be a one-stop shop for all their IT needs, not just for a single location but across multiple geographies. The acquisition is also in line with our goal to have a stable income stream through our Lifecycle Services business,” he adds.
Shares in Procurri closed flat at 29 cents on Friday.