Iomart, Glasgow Cloud Firm, buys Extrinsica Global

Iomart CEO Reece Donovan

Glasgow-based cloud computing firm Iomart Group has agreed to acquire Extrinsica Global, a Microsoft Azure Cloud solution services provider with offerings including managed Azure Cloud, Azure solution design and implementation services, support and optimisation services and licencing.

“The initial consideration for the acquisition is £4.0m, with a potential further £0.3m in cash payable on the achievement of certain key customer targets during the calendar year,” said Iomart.

“Of the initial consideration, £2m will be satisfied by the issue of 1,562,500 new ordinary shares in Iomart, which under the terms of the sale and purchase agreement are subject to a 12 month ‘lock in’ provision and based on a fixed share price of £1.28, being the volume weighted average price for the 90 days prior to completion.

“The balance of £2.0m will be paid in cash. Iomart will also repay £3.7m of debt acquired on completion.

“The acquisition also includes a further £4.0m to £7.0m of contingent earn-out payments which are calculated based on Extrinsica’s profitability for the 12 months ending 31 March 2024.

“Of any earn-out payment that becomes due, £1.0m will be satisfied by the issue of Iomart shares (the number of shares to be issued will be based on the same share price as the initial consideration).

“The amount of contingent consideration payable, based on management’s forecast, recognised at the date of the acquisition, is expected to be £4.0m.

“The initial consideration, debt settlement and any earn out consideration will be financed through a combination of existing bank facilities and cash on the company’s balance sheet.

“The vendors of Extrinsica include the existing management team, amongst others.

“The largest shareholder is The Vale Retirement Trust with c. 25% of all the issued share capital. This trust is an investment vehicle for a high wealth individual who is not involved in the management of the business.”

Extrinsica CEO and co-founder Simon Smith will continue to lead the business as CEO. 

For the year ended March 31, 2023, Extrinsica generated revenues of £7.4 million, representing year on year growth of 40%.

Iomart CEO Reece Donovan said: “We are delighted to welcome the Extrinsica team to iomart, providing a large step forward in iomart’s capabilities to support existing and new customers in their use of Microsoft’s Azure cloud platform.

“Simon and the team have been at the forefront of the market developments of Azure since 2017 and have deep skills and expertise in this in-demand area of cloud computing, which will accelerate the initial investments we have made in our own Microsoft resources and capabilities.

This is a meaningful step in our strategy as we position the Group for its next phase of growth as a leading secure hybrid cloud business.”

Extrinsica CEO Simon Smith said: “Joining iomart marks an exciting phase for our highly skilled, experienced and ambitious team, providing us with a strengthened platform for growth.

“It allows us to leverage joint capabilities, capitalise on our understanding of the markets we operate in and build upon our significant achievements to date.

“Iomart has a long pedigree in cloud infrastructure, an impressive customer base and a growth strategy which I believe positions iomart well for future success.

“The team and I are all incredibly excited to be working as part of the wider group and look forward to being a key part of driving iomart’s ongoing success.”