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First Derivatives plc (LON:FDP) is continuing its campaign of commercial acquisitions, today announcing that it has acquired the entire issued share capital of ActivateClients Limited.
The earnings enhancing acquisition provides complementary software products, particularly HTML5 capabilities, that are expected to enhance the Company’s software platform.
The vendors of ActivateClients include Pat Brazel and Keith MacDonald, who are Non-Executive Directors of First Derivatives. Following the acquisition Mr Brazel, who is Chief Executive Officer of ActivateClients, has been appointed Global Head of Software Sales for First Derivatives and will step down from the Board of the Company, as detailed in a separate announcement today.
ActivateClients, based in Dublin, Ireland, is a software business targeting financial markets and specialising in delivering applications and trading systems that increase customer engagement for its clients. It uses agile software development methods and delivers solutions either on premise or through a Software as a Service model. Its HTML5 capabilities are particularly attractive to First Derivatives and the Company intends to accelerate its product development roadmap through wider use of HTML5 following this acquisition.
ActivateClients operates for clients across the broking, institutional foreign exchange and fixed income markets. In addition ActivateClients has formed three joint ventures; ActivateAlpha, a provider of quantitative analysis software to fund and wealth managers; Active Tradercast, a web-based system to link retail traders and provide research and analysis; and Enhanced Bond Analytics, a proprietary software system designed to identify arbitrage opportunities in G7 sovereign debt markets.
Pat Brazel, Chief Executive Officer of ActivateClients, commented: “ActivateClients’ achievement has been built on the technical expertise and dedication of our team and I am sure that our products and front office development capabilities will be a significant asset to First Derivatives. We look forward to working with our new colleagues and being part of the continuing First Derivatives success.”
Terms of the Acquisition
The initial consideration for the acquisition is €4.75m (£3.4m), of which €1.5m (£1.1m) is payable in cash and €3.25m (£2.4m) is payable through the issue of 183,185 First Derivatives new ordinary shares (the “Consideration Shares”). Deferred consideration of up to €2.0m (£1.4m) is payable on the achievement of agreed targets in the year to 29 February 2016. In its latest financial year to 31 December 2014, ActivateClients reported revenues of €1.0m and €0.2m of profit before tax.
Mr Brazel will receive 97,417 Consideration Shares. He does not currently hold any First Derivatives ordinary shares and following the acquisition he will hold 0.4 per cent of the enlarged issued capital. Mr MacDonald will receive 35,877 Consideration Shares following which he will hold 45,877 First Derivatives ordinary shares representing 0.2 per cent of the enlarged issued share capital.
Application has been made for the 183,185 Consideration Shares to be admitted to trading on AIM and ESM and it is expected that admission will take place on 27 March 2015. The Consideration Shares will rank pari passu with the existing shares of the Company. Following this allotment, the total issued share capital of the Company will increase to 23,165,961 ordinary shares.
Brian Conlon, Chief Executive Officer of First Derivatives, commented: “ActivateClients is a low-risk, earningsenhancing acquisition for the Company that will deliver synergies on a number of levels. It provides additional technology capabilities, particularly in HTML5, and its staff possess software development skills that will be useful across a range of projects First Derivatives is working on. We welcome its staff to the Company.”
With regard to the appointment of Mr. Brazel, this is viewed as a move to strengthen First Derivatives’ executive leadership as it seeks to penetrate additional vertical sectors, using the capabilities of its Delta platform and kdb+ to capture and analyse big data, especially fast streaming information. He will work alongside Gerry Buggy, who will take up a new role as Chief Technology Officer.
Mr Brazel has more than 25 years’ experience in the software industry, including nearly a decade as President of Sungard Capital Markets. He was also a founder of Sentry Financial Technology, now part of IBM and of GoldTier Technologies, which was acquired by Thomson Reuters in 2013.
Pat Brazel commented: “My time as a Non-Executive Director at First Derivatives has convinced me of the Company’s potential to become the leading player in the emerging market for fast data and analytics. In my new role as Global Head of Software Sales, I look forward to helping First Derivatives realise this ambition.”
Brian Conlon, Chief Executive Officer of First Derivatives, commented: “I am delighted to announce the appointment of Pat Brazel. His track record in driving sales at high-growth enterprise software companies will be extremely valuable to the Company. We continue to invest in our sales and marketing capability to meet a range of market opportunities, particularly as we execute on our strategy to enter new vertical markets.”