Hemel Hempstead, UK-based Northgate has bought an exclusive option to buy Rebus HR Group for 5m pounds ($8.7m), in a move that values the target operation at 150m pounds ($260.6m) including debt. Northgate’s shares were suspended from trading on the London Stock Exchange following the announcement.
Northgate has made several previous acquisitions in the HR services market, which IDC believes will grow at 30% over the next four years. In June 2003, it acquired payroll-processing company Cara Payroll Group Ltd for 13.4m pounds ($23.4m), and in November bought PWA Group Ltd, a small, human resources software arm of Microsoft Corp for 2.5m pounds ($4.4m) in cash and 1.7m pounds ($3.0m) in net liabilities.
Northgate is slightly larger than Peterborough; UK-based Rebus HR Group in terms of revenue, but the deal is being classified as a reverse takeover because Northgate’s market capitalization of 148m pounds ($258m) is smaller than the valuation being placed on Rebus. In the 12 months to March 31, 2003, Rebus HR grew its pre-tax profit 32% to 12.5m pounds ($21.8m) on revenue that rose 1% to 76m pounds ($132.5m). It has 800 employees, and counts 70 of the FTSE 100 companies among its clients.
In its last full financial year to April 30, 2003, Northgate made sales of 85.2m pounds ($148.6m), but has expanded through several acquisitions since then. In the six months to October 31, 2003, Northgate made a slim net profit of 306,000 pounds ($533.5m) on revenue that grew 28% to 50.6m pounds ($88.2m). Revenue from its HR business grew 30% to 10.6m pounds ($18.5m) during the same period.
Rebus HR develops HR software such as employee information systems and payroll, and provides a range of services such as hosting, bureau payroll and fully managed payroll services. Northgate said it currently provides HR software and services to more than 1,500 clients in the UK and Ireland.
This article is based on material originally produced by ComputerWire.
