Quindell provides expertise in software, consultancy and technology-enabled outsourcing in markets including insurance, telecommunications and their related sectors.
The acquisition will enable the group to further strengthen its systems integration capability for its technology solutions, and provide a platform for further expansion into a geography where the demand for software and services continues to expand at a rapid rate.
Quintica is a specialist systems integrator and outsource service provider to the telecommunications marketplace throughout the Middle East and Africa. It has offices in South Africa, Ghana, Nigeria, Kenya, Uganda, Dubai and Abu Dhabi.
Quindell already had an approximate ownership of 7.7% in Quintica prior to the latest transaction, and already has a working relationship with the SA firm spanning 12 months
“As well as currently being engaged in a number of key joint bid opportunities, Quintica, in combination with Quindell, has recently won a major contract with a leading multinational telecoms group for their South African operation,” it said.
Quindell issued 38,461,538 shares and paid approximately £37,000 (R495,092) in cash for Quintica.
It will also settle shareholder loans totalling about £592,000 (R7,921,470), by a payment of £271,000 (R3,626,600) in cash on completion of the deal, and the issue of a further 3,025,128 shares on the first anniversary of it.
Quintica has, in return, warranted profit after tax of circa £710,000 (R9,501,430) for the twelve month period ending 30 June 2013.
According to Quindell, its approach to acquiring companies using warranted targets has proven to be a successful method, consistently delivering an achievement of over 150% of their respective targets.
“Whereas the acquisition of Quintica is only expected to be slightly Earnings Per Share (EPS) enhancing in the remaining period to December 2012, the company expects it to be significantly EPS enhancing during 2013,” it said.
Rob Terry, chairman and CEO of Quindell said: “I am delighted to announce the tighter integration of the Quintica team within Quindell through this acquisition. Their knowledge and expertise with our Challenger OSS platform has already helped us in a number of international opportunities and now as part of the group we look to expand our reach within the Middle East and African territories and beyond.”
“The combination of technology expertise and demonstrable track record in outsource service provision is an ideal match for the Quindell business model and philosophy.
“The rationale for this acquisition is clearly demonstrated by the recent major contract win with a leading multinational telecoms group for their South African operation. This contract, in combination with other wins underpins the significant growth in Quintica’s business plan as part of Quindell in 2012 and beyond,” Terry said.
Currencies converted on 18 September 2012 (1 ZAR = 0.0747256 GBP)