Iomart buys cloud consultant SystemsUp in £13m deal

WEB hosting firm Iomart has struck a deal, worth up to £13 million, to buy a London-based cloud computing consultancy.

Iomart are a Glasgow-based group. Picture: Donald MacLeod

The acquisitive Glasgow-based group, which releases it latest set of annual results today, said the acquisition of Systems-Up would help to broaden its reach in the “incredibly complex” cloud computing arena.

Iomart has paid £9.5m up front for SystemsUp, which delivered a pre-tax profit of £1.5m in the year to 31 March, with a further payment of up to £3.5m to be made depending on revenues generated in the current financial year.

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Chief executive Angus MacSween said: “The market for cloud computing is becoming incredibly complex and the demand for public cloud services is increasing at pace.

“With the acquisition of SystemsUp, Iomart has broadened its ability to engage at a strategic level and act as a trusted adviser on cloud strategy to organisations wanting to create the right blend of cloud services, both public and private, to fit their requirements.”

SystemsUp managing director Peter Burgess added: “We have already built up a significant reputation and expertise in helping organisations use public cloud to drive down IT costs and improve efficiency. As part of Iomart we can leverage their award-winning managed services offerings to deepen and widen our toolset to deliver a broader set of cloud services, alongside continuing to deliver the strategic advice and deployment of complex large public and private sector cloud projects.”

The SystemsUp deal is Iomart’s biggest since it splashed out £23m in October 2013 on Leeds-based disaster recovery specialist Backup Technology, which boasts Everton and Liverpool football clubs among its list of clients.

Iomart, co-founded in 1998 by MacSween and his brother-in-law, Bill Dobbie, is today expected to announce adjusted pre-tax profits of about £16.6m for the 12 months to the end of March, up from £14.6m a year ago, helped by “solid” organic growth and good performances from the firms it has acquired.

As well as Backup, the Aim-quoted firm snapped up dedicated servers provider Redstation in 2013, and at the end of last year it announced the acquisition of cloud hosting specialist ServerSpace for a maximum payment of £4.25m, depending on performance levels.

In a recent trading update, Iomart said its hosting division had continued to win a “substantial” amount of new business, helped by the growing adoption of cloud services as companies outsource the storage of their data and applications.

Analysts at SP Angel have forecast a 19 per cent rise in sales for the Glasgow group, which received a £321m approach from rival Host Europe last year before the private equity-backed firm walked away in September.

The broker said: “Iomart operates in a large and growing market for cloud services within the UK. The group has a broad offering, including being able to incorporate Amazon and Microsoft services within overall packages for customers.”

SP Angel also predicted that the firm would continue to attract bid attention.