Information Services Corp (TSE:ISV) has bolstered its services business with the acquisition of automation software group AVS Systems Inc in a deal worth up to C$45mln.
The latter provides technology services to the lending, leasing, and credit issuing firms in Canada.
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The deal, made by ISC subsidiary ESC, is expected to be earnings accretive in terms of EPS (earnings per share) in 2019 providing access to new sources of recurring revenue.
"With the addition of AVS’s services and existing customer base, our Services segment is positioned to deliver proven credit due diligence, protection and default solutions to the Canadian financing industry," said Jeff Stusek, president and chief executive of ISC.
"We continue to invest in our technology platforms and service teams to deliver comprehensive solutions to customers.
"This, in conjunction with our financial strength, means that we are poised to capitalize on new avenues for growth in our services segment."
ISC said C$25mln was paid in cash on closing of the deal and the firm may pay up to a further C$20mln over the next 13 months, depending on the realization of future business with financial institutions and auto and equipment finance companies across Canada.
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AVS is a fast growing business with compound annual revenue growth of around 60%between 2012 and 2016.
For the nine months to September 30, 2017, it realised revenues of around C$17 mln and EBITDA (underlying earnings) of approximately C$2.4 million.
ISC is the leading provider of registry and information management services and the bulk of its revenue is linked to registry transaction volumes.
Land registry revenues for its third quarter, reported last month, were C$14,335 out of an overall revenue figure of C$23.9mln versus C$22.9mln in 2016 - an increase of 4.4%.
EBITDA (earnings before interest, taxes, depreciation and amortization) came in at C$7.6 million compared to C$7.3 million in the same period of 2016 - up 4.1%.
Free cash flow was up 42.9% to C$8mln in the period.
Shares added over 4% to C$18.40 on the day.