TIDMSQS
RNS Number : 2056S
SQS Software Quality Systems AG
29 September 2017
29 September 2017
SQS Software Quality Systems AG
("SQS" or "the Company")
Acquisition of Double Consulting S.r.l. ("Double
Consulting")
SQS Software Quality Systems AG (AIM: SQS), the leading global
provider of quality assurance services for digital business
processes, announces that it has agreed to acquire Double
Consulting S.r.l. ("Double Consulting"), a leading Italian
management consultancy ("MC") business, at a valuation of EUR10.5
million (the "Acquisition"). The consideration for the acquisition
will be entirely funded from the Company's existing cash
reserves.
Background
Double Consulting was founded in 2005, headquartered in Rome,
Italy and having an additional presence in Switzerland. The
Company, which offers a range of consulting, IT services and
outsourcing, complements SQS's existing position in the growing
management consulting market and strengthens SQS's offerings in the
financial services and insurance sectors (BFSI).
Double Consulting's dynamic structure and its focus on
developing more effective methods and innovative solutions for its
customers have seen the Company grow steadily and establish a
strong position within BFSI in the Italian marketplace. For the 12
month period to 31 December 2016, Double Consulting recorded
revenues of EUR6.63 million and is profitable at a typical level
for a niche management consultancy.
Acquisition Rationale
As reported in the recent half year results, SQS is seeing
strong demand for MC services across a number of sectors and
geographies, and has secured new clients from some of the world's
best known global technology brands, operating at the cutting edge
of digital and technology trends.
As the shift to digital systems takes hold in Europe, this
evolution opens up particular opportunities for growth where SQS
already enjoy strong existing customer relationships. This is
particularly the case core geographies, including Italy, where SQS
has made good progress, experiencing solid net organic growth.
Given this positive backdrop, SQS believes that Double
Consulting represents an excellent fit within SQS' global growth
strategy, significantly strengthening its positioning in the BFSI
sector within the Italian and European markets. Together SQS and
Double Consulting will complement each other working as part of a
combined group.
The Acquisition provides SQS with a growing revenue base,
supporting SQS's stated strategy of diversifying its geographic
revenue sources and increasing its exposure to higher margin MC
business.
Double Consulting brings with it a strong management team headed
by Francesco Rosetti, CEO, who will continue to lead the business
under SQS's ownership. It is agreed between the parties that Mr.
Rosetti will serve as managing director of Double Consulting for at
least three years after the closing subject to mutual satisfaction
of SQS and Mr. Rosetti.
Acquisition Consideration, Transaction Structure and Timings
The acquisition values the entire issued and to be issued share
capital of Double Consulting at EUR10.5 million and will be
adjusted downwards if the net cash position of the Company on First
Closing is less than EUR700,000. The consideration for the
acquisition will be paid in tranches as follows and will be
entirely funded from the Company's existing cash and debt
resources.
The transaction structure will be as follows:
-- SQS will acquire 51% of the share capital of Double
Consulting from the selling shareholders on 3 October 2017 (the
"First Closing");
-- SQS will acquire a further 39% of the share capital of Double
Consulting by 31 March 2018 (the "Second Closing").
-- One selling shareholder will retain a 10% stake.
Dik Vos, Chief Executive Officer of SQS, commented:
"At SQS, we have a clear strategy to offer our clients
best-in-class digital transformation services, delivered on a truly
global basis. We have made good progress across Europe, including
good growth in Italy, so the acquisition of Double Consulting
allows SQS to expedite our ambitions in the BFSI sector and in that
key geography. The acquisition will also augment our continued
shift toward higher margin MC projects, which will drive future
growth and progress towards our target of at least 9% operating
margins by 2019. We warmly welcome Double Consulting's talented
team to SQS and look forward to continuing to build upon their
client base and exceptional reputation as the leading management
consultancy in the region."
Enquiries:
SQS Software Quality Systems AG Tel. +49 (0) 2203 91 54 0
Diederik Vos, Chief Executive Officer
Rene Gawron, Chief Financial Officer
Numis Securities - Nomad and Joint Broker Tel +44 (0) 20 7260 1000
Simon Willis / Jamie Lillywhite / Mark Lander
Stockdale Securities - Joint Broker Tel. +44 (0) 20 7601 6100
Robert Finlay / Antonio Bossi / Fiona Conroy
FTI Consulting - Financial Media and Investor Relations Tel. +44 (0)20 3727 1000
Matt Dixon / Dwight Burden / Nicola Krafft sqs@fticonsulting.com
About SQS
SQS is the leading global provider of quality assurance services
for digital business processes. This position stems from over 35
years of successful consultancy operations. SQS consultants provide
solutions for all aspects of quality throughout the whole software
product lifecycle driven by a standardised methodology,
industrialised automation processes and deep domain knowledge in
various industries. Headquartered in Cologne, Germany, the company
now employs approximately 4,400 staff. SQS has offices in Germany,
UK, US, Australia, Austria, Egypt, Finland, France, India, Ireland,
Italy, Malaysia, the Netherlands, Norway, Singapore, South Africa,
Sweden, Switzerland and UAE. In addition, SQS maintains a minority
stake in a company in Portugal. In 2016, SQS generated revenues of
EUR327.1 million.
SQS is the first German company to have a primary listing on
AIM, a market operated by the London Stock Exchange. In addition,
SQS shares are also traded on the German Stock Exchange in
Frankfurt am Main.
With over 10,000 completed projects under its belt, SQS has a
strong client base, including half of the DAX 30, nearly a third of
the EURO STOXX 50 and 20 per cent of the FTSE 100 companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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