Gadget repairer Regenersis – one of Scotland’s biggest employers – is raising £100 million and buying a Finnish software company as it looks to build its presence in the expanding market for data erasure services.
The company said it was acquiring Blancco Oy for about €60 million (£49.6m) funded by the share placing with existing and new investors which was significantly oversubscribed.
With European regulations governing the use of consumer data due to come into force next year, Regenersis said demand for data erasure services was expected to show strong growth as companies come under more pressure to keep their customers’ details secure.
Executive chairman Matthew Peacock said: “Blancco is a great business with an excellent fit – and at a price that works for shareholders.
“Most importantly, it moves the centre of gravity of the group clearly into advanced solutions, with a majority of our profits in this segment, and it opens up a variety of possibilities for future development.”
Analysts at Equity Development welcomed the deal and significantly upped their price target on Regenersis shares, which have already risen by more than 500 per cent since Peacock’s Hanover Investors staged a boardroom coup in 2011.
“We believe this nascent data erasure market has the potential of delivering exponential growth, with researchers pencilling in smart-phone and tablet shipments of 2.2 billion in 2014,” said a research note. The analysts have raised their target share price by 16 per cent from 430p to 500p.
Blancco was founded in 1997, has approximately 130 employees, and has been growing revenue at approximately 25 per cent year over the past five years.
As well as Finland, the company has offices in the UK, Germany and the United States and additional sales offices in Australia, Canada, France, Italy, Japan, Malaysia, Mexico, Russia and Sweden.
Regenersis will hold an EGM on 16 April to formally approve the transaction, It will be funded by the proceeds of a placing, at a price of 345p a share, which has been backed by new and existing institutional shareholders. The company said the proceeds will also be used for general corporate purposes, which may potentially include repayment part of the group’s revolving credit facility.
Regenersis, which employs over 500 in Scotland, also said yesterday that the group’s trading since 31 December remains in line with market expectations.
“The board expects that profit growth in the second half of the current financial year will come primarily from the group’s emerging markets and advanced solutions divisions,” it said in a statement.
“Opportunities for growth, both organically and by acquisition, remain strong.”
Regenersis repairs products including mobile phones, laptops and tablets, set top boxes and televisions and has contracts with major telecoms companies and retailers.
The company acquired its Scottish sites when it bought Total Repair Solutions in a £6.2m deal in 2009. Shares in Regenersis closed up 37.25p, or 10.4 per cent, at 395p.