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Procurri to make 51%-owned JV wholly-owned unit in US$22m acquisition
LIFECYCLE services and data centre equipment provider Procurri Corporation intends to make its US-based joint venture Rockland Congruity its wholly-owned subsidiary.
This will be achieved by paying US$22 million for the 49 per cent stake it does not already own in Rockland Congruity.
Procurri, in a Singapore Exchange statement filed on Nov 18, announced that its subsidiary Procurri LLC had entered into a conditional sale and purchase agreement with Congruity LLC, with which it formed Rockland Congruity in January 2017.
Rockland Congruity offers third-party IT maintenance and support services and sells refurbished enterprise hardware in the Americas.
The US$22 million will be paid in two tranches - US$12 million upon completion of the purchase of the 49 per cent stake, and US$10 million in January 2020. Cash will be the primary mode of payment, although up to US$4 million can be paid in the form of Procurri shares.
Procurri will fund the acquisition using internal resources and/or bank loans.
Congruity LLC is prohibited from competing with Rockland Congruity for three years after the transaction. As this is a major transaction, Procurri shareholders will get to vote on the proposed deal at an extraordinary general meeting to be convened at a date to be announced.
Procurri's chairman and global chief executive officer Sean Murphy said that making Rockland Congruity its wholly-owned subsidiary will sharpen the group's competitive edge at a time when its peers in the third-party IT maintenance industry are rapidly scaling up through mergers and acquisitions to increase market share.
"Besides improving decision-making efficiency, full integration will enable us to compete more effectively in the current business environment. This is important as companies worldwide are increasingly turning to service providers that can be a one-stop shop for all their IT needs, not just for a single location but across multiple geographies. The acquisition is also in line with our goal to have a stable income stream through our lifecycle services business," he said.
For the first nine months of 2018, Rockland Congruity raked in US$28.3 million in revenue, up from US$24.1 million for the whole of last year.
Mainboard-listed Procurri last traded unchanged on Nov 16 at 29 Singapore cents.