Xchanging plc Acquires Total Objects
Xchanging plc ('Xchanging'), the business process, procurement and technology services provider, today announces it has signed an agreement to acquire 100% of insurance software business, Total Objects Limited ('Total Objects'), for a potential total cash consideration of up to £21 million on a cash-free debt-free basis, subject to clearance by the Competition and Markets Authority ('CMA').
Total Objects provides the London and global markets with (re)insurance software that fully automates the insurance lifecycle. The acquisition will enable Xchanging to realise product development synergies in the Binder market by combining its Binder360 offering with the Total Objects BinderCloud software offering*. Total Objects also offers further potential synergies with Xchanging's Xuber insurance software.
Xchanging's strategy is to grow both organically by increasing market share but also by acquisition, in particular of leading technology businesses which bring both intellectual property and an enhanced technology offering. Total Objects is a well-respected developer of software with a reputation for innovation: its offering is highly complementary to Xchanging's and enhances its position in an important market segment.
On CMA clearance, Xchanging will pay a total cash consideration of up to £21 million for the acquisition on a cash-free, debt-free basis, to be satisfied from Xchanging's existing cash resources. Of this, £11.5 million is payable on completion, and up to a further £9.5 million is payable in 2015, 2016 and 2017, of which £1.5 million is deferred and the balance is subject to certain performance targets being achieved.
Total Objects' employees and management will join Xchanging, including the three founder shareholders, Larry Sullivan (Total Objects' non-executive Chairman), Jim Barry (Total Objects' Managing Director), and Vladimir Serbin (President of Total Objects' Russia).
The value of the gross assets being acquired is £4.6 million for the year ended 31 December 2013. The EBITDA for that year was £0.5 million. The acquisition is expected to be earnings neutral in the financial year ending 31 December 2014, and to be marginally earnings accretive in the financial year ending 31 December 2015.
Ken Lever, Xchanging Chief Executive, commented: "Insurance is a core market for our services, and Total Objects will contribute to the further development of our presence in the Binder market as well as providing synergies with our Xuber insurance software. Total Objects has a talented team with a proven track record of product development: it will fit very well with our growing insurance software business. I am pleased to announce today's acquisition and look forward to welcoming the Total Objects business into Xchanging. "