View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
March 31, 2005

Northgate acquires Sx3 for $293m

IT outsourcing and services provider Northgate Information Solutions has announced the acquisition of Service and Systems Solutions (Sx3), a software and services provider to the UK public sector. It will pay Sx3's parent company Viridian Group GBP 155m ($293m) in cash for the Belfast, Northern Ireland-based company.

By CBR Staff Writer

Sx3 provides applications software to over half the local authorities in the UK, and also provides IT and business process outsourcing services to local government, education and utilities sectors.

Hemel Hempstead, UK-based Northgate plans to borrow heavily to complete the purchase. It will fund the acquisition with through a new GBP 275m ($520m) debt facility which it has agreed with ABN AMRO and Barclays Capital, and the placement of 37.5 million new Northgate shares worth approximately GBP 25m ($47m).

Northgate CEO Chris Stone said that although it left the company in a lot of debt it had a strong base of recurring revenues and regular cash flows. That means that we can carry a level of gearing that might be unusual in other businesses with less certain or less regular cash flows.

The acquisition will make local government one of its two key sectors, along with human resources following a similar-sized purchase of Rebus HR Group in a reverse takeover just over a year ago.

Stone said that he believed that the integration of the Rebus acquisition had been completed, but that the timing of the purchase of Sx3 was driven by the seller. We have no say over that timing that’s the board of Viridian and their shareholders’ decision. But, we have to be very clear with our shareholders that there were a number of significant assets in the UK market that would be of interest to Northgate if they became available, and Sx3 is one of them.

Sx3 reported sales of GBP 60.7m ($114.7m) for the six months to the end of September 2004, and an operating profit of GBP 4.8m ($9.1m). It has 1,100 employees, to add to Northgate’s headcount of 2,200, but Stone confirmed that there would be redundancies, though it was too early to say where or how many. Northgate plans to make cost savings of GBP 5m ($9m) a year through the acquisition, and it is expects it to be accretive to earnings in the financial year to the end of April 2006.

Content from our partners
Rethinking cloud: challenging assumptions, learning lessons
DTX Manchester welcomes leading tech talent from across the region and beyond
The hidden complexities of deploying AI in your business

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.