UK screen dealing firm Patsystems is looking to move into the fast growing credit derivatives/structured finance market with the acquisition of London-based Tamesis Limited.
Loss-making Tamesis is a privately-owned and VC-backed business established in 1998 that provides real-time trade capture, valuation and risk management software to the structured finance market.
For the year ended 31 December, Tamesis had sales of £920,000 and made a pre-tax loss of £373,000. Net liabilities stood at £84,000.
Patsystems says it will make an initial cash payment of £61,901 for Temesis plus an earn out based on three times the pre-profit over a two-year period.
The earn out will be paid in Patsystems stock based on a nominal issue price of 15p per share. The maximum number of shares that could be issued is capped at 23.3 million, which equates to a maximum of £3.5 million of consideration.
Patsystems will also assume Tamesis's net liabilities of £300,000, which includes £250,000 of debt.
Commenting on the acquisition, Patsystems CEO Kevin Ashby says: "The addition of Tamesis allows us to enter the wider derivatives market, better leverage our global presence and scale and help us move further towards our longer term aim of providing a wide portfolio of trading and risk management tools across the range of asset classes our customers require. A small focussed acquisition like Tamesis can be readily integrated into our current organisation and structure."
Patsystems says all Tamesis staff will be re-located to its London offices.
News of the acquisition comes as Patsystems reports reduced first half losses of £0.55m, down from £1.85m in H1 last year.
Revenue was at £7.7m, a 45% increase from £5.3m a year ago, although this was boosted by the inclusion of hardware on one contract for the Tokyo Grain Exchange. Without this, the firm's revenue growth would have been 14%.
Patsystems shares slipped 4.80% to 14.75 pence in mid-morning trading.