Kin and Carta PLC (LON:KCT), which advises companies on how best to exploit digital technology, has acquired Spire Digital, a US-based digital transformation consulting firm.
The acquisition will initially cost roughly US$14.8mln in cash and is expected to enhance Kin and Carta’s earnings in the first full year of ownership. As is often the case in acquisitions of privately-owned companies, there will be earn-out clauses that could increase the cost of the acquisition.
Spire generated revenues of US$9.4mln and adjusted operating profit, adjusted for normalisation of owners' compensation, of US$1.3mln in 2018. Revenue from January 2015 to October 2019 grew by a compounded annualised growth rate in excess of 20%.
Kin and Carta said it had raised around £13.6mln to partly finance the acquisition through a placing of 15.33mln shares at 89p each.
The newly issued shares represent around 9.9% of Kin and Carta’ss issued share capital before the placing.
Several directors of Kin and Carta bought shares at the placing price.
Spire has built a set of digital transformation (DX) services that are complementary to Kin and Carta's and will expand the UK company’s geographic reach to the western United States.
Adam Hasemeyer, Spire’s president, and Nick Coppolo, its chief operating officer, will remain as part of Spire’s senior management. Mike Gellman, Spire's founder and current owner, will remain an advisor to Spire Digital.
Spire will be integrated into the Kin and Carta Innovation platform in stages starting in the first year following completion of the acquisition.
"We've grown Spire significantly in recent years and have established a strong reputation in the western US DX market,” Hasemeyer said.
“To realise our fullest potential, we recognised that we needed a partner with deeper resources and a broad geographic reach. We scouted the market from the largest global firms to niche players and decided on Kin and Carta as the perfect choice for Spire,” he added.
Kin and Carta's chief executive officer, J Schwan, said the acquisition was “directly in line” with the company’s growth strategy.
“Spire has a strong reputation of delivering highly innovative solutions and building a winning culture that's hard to find,” Schwan said.
Shares in Kin and Carta were up 3p at 92p in early deals.