Crimsonwing has entered into a share purchase agreement for the acquisition of the total share capital of VDA Informatiebeheersing BV, a Dutch IT software and services business for a total consideration of €1.9 million. The transaction will be complete on July 1.
Based in Hilversum, the media centre of Holland, VDA is an IT services provider that has been operating for the past 16 years. Its client base is largely in the media and publishing sector.
VDA is a Microsoft Dynamics partner and generates substantial revenues from licences and maintenance of its proprietary enterprise resource planning (ERP) solutions for public broadcasters, publishing companies and newspapers.
With annual revenues of €3.4 million, VDA is a well-established business with many prestigious clients. With two businesses (Crimsonwing BV and Crimsonwing Promentum BV) already in the Netherlands, Crimsonwing will now combine these three operations to give Crimsonwing a stronger Dutch base and brand image.
The combined companies will operate under a unified management structure, and with shared office facilities and services this will deliver substantial operational cost savings. This acquisition will drive improvements in profitability as well as provide new opportunities across the combined client base for all Crimsonwing solutions.
VDA's strong presence in the broadcasting and media sector will help Crimsonwing establish a critical mass in the Dutch media and entertainment industries. Its provision of ERP and custom development services will ensure that VDA's services are cleanly absorbed into Crimsonwing's three main functional areas of e-business, custom development and ERP.
VDA brings with it four business verticals, all with associated industry knowledge and intellectual property rights (IPR). The media/publishing vertical complements Crimsonwing's earlier UK acquisition of Peracto Media and Publishing vertical and enhances its ERP offering to this industry.
The merging of VDA with Crimsonwing's Dutch-based businesses will allow VDA to exploit the synergistic benefits working with Crimsonwing's Malta solution centre. Crimsonwing CEO David Walsh said: "VDA's well-established client base of over 60 long-term clients will consolidate the strong recurring revenue which will now be spread across a much wider base. Crimsonwing will respond to opportunities to cross-sell its dynamics, e-business and custom work across such an increased client base through the use of its Malta-based solutions centre. The benefits of working with a Malta-based solution centre are well proven and these will be extended for the benefit of VDA's clients who will have immediate access to a broader range of services and a larger skills pool. They will experience the workings of a highly efficient professional services model at its best, as well as be able to rely on a stable and profitable public company".
The acquisition of VDA fits in perfectly with Crimsonwing's specific strategy of bringing additional and larger companies into the Crimsonwing Group. VDA fits Crimsonwing's target profile as outlined in Crimsonwing plc's prospectus of November 2007. The acquisition will be funded through a combination of cash and debt financing which will allow Crimsonwing to continue to pursue its strategy with further acquisitions.
The VDA acquisition will increase Crimsonwing plc's euro sales revenues to 45 per cent of group revenues and simultaneously decrease the company's exposure to exchange rate fluctuations.
Crimsonwing plc has sales offices in the UK, Netherlands, the US and an ISO-certified solution centre in Marsa with a group headcount of over 200 IT professionals.