Web Hosting Reviews & Ratings

August 17, 2011

K3 Acquires FD Systems

Welsh web hosting provider, K3 Business Technology Group, recently announced the acquisition of U.K.-based eCommerce company FD systems (FDS) for $3.7 million. This acquisition follows the December 2010 purchase of FDS’ Sage 200 business unit. Once all papers are signed, the business is predicted to provide a profit of $1.3 million for revenues of approximately $11.5 million per year.

FDS Customers

FDS currently offers eCommerce solutions and sage to over 300 customers across the United Kingdom and Ireland. This includes the United Utilities Group, Chubb and Ideal Shopping Direct. This acquisition will provide K3 with additional expertise throughout a range of Sage products in addition to marketing its current web hosting services to the 300 accounts within FDS.

Advantages of the Acquisition

Also, K3 will deliver FDS’ leading eCommerce solution, Gravit-e which can be fully integrated with Sage and all Microsoft products. Additionally, the acquisition will integrate FDS into K3’s existing Sage department resulting in K3 being one of the largest Sage partners in the U.K., boasting over 750 customers. This move significantly expands the customer base of K3 allowing them to offer a variety of products to a larger group of people across several countries.

Statement from the CEO

In a recent statement by the CEO of K3, he states his joy to be acquiring FDS due to the combination of Sage experience and eCommerce functionality. This provides an excellent extension to current Sage products. He further stated that the deal represents additional progress in the company’s strategy to obtain a variety of customer bases with consistent recurring revenues. The 300 current FDS customers will now be exposed to additional software services.

Financial Obligations by K3

Upon completion of the acquisition, cash will be paid to FDS in addition to the repayment of all loans worth $672,000. An additional lump sum of $656,000 will be paid to K3 following the completion of specific conditions. Furthermore, the deal negotiates an earn-out of up to $1.6 million in cash which could be payable following 12 months if specific criteria is achieved by the company.

It sounds as if FDS was slightly struggling. Despite have 300 customers across the U.K. and Ireland, it appears as if this is the optimal move for the company. K3 is a robust organization that will significantly increase the profits of the new acquisition while providing customers with a variety of new and useful services.

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