Capita is acquiring Northgate Managed Services (NMS) from Northgate Information Solutions for a "knock-down price" of £65 million.
Capita's outlay comprises £22 million payable in cash, the assumption by Capita of a pension deficit of £17 million net of tax relief, and finance leases for equipment used in the business totalling £26 million.
Northgate Managed Services provides cloud-based infrastructure systems and specialist managed services to public and private sector businesses. NMS made a pro forma operating profit for its financial year to 30 April 2012 of £10 million on a turnover of £141.6 million.
Headquartered in Newtownabbey in Northern Ireland, NMS has around 1,000 employees and a local IT services delivery centre. Separate divisions to NMS are being retained by Northgate Information Solutions.
Paul Pindar, chief executive of Capita, said: "By combining NMS's managed IT services with Capita's complementary business process and IT outsourcing capabilities, Capita will enhance its offering to clients and enable them to transform the way they do business."
John O'Brien, an analyst at TechMarketView, said: "Capita is acquiring Northgate Managed Services (NMS) for a knock-down price of £65 million, less than half its £141.6m revenue."
O'Brien said: "The sale confirms our view that owners KKR have been viewing Northgate's three businesses - Northgate Public Sector (NPS); Northgate Arinso (NGA) and Northgate Managed Services (NMS) as a 'divide-and-sell' opportunity.
"The three businesses continued to be run as separate companies with little attempt to integrate them or find potential synergies. KKR has effectively sold NMS for a significant loss on its investment."
O'Brien said KKR bought Northgate as a whole for £1.1 billion in March 2008. At the time, he said, NMS represented 23 percent of Northgate's turnover. "So, although a simplification, you could say that NMS was bought for about £253m in 2008. The sale to Capita has therefore netted KKR almost 75 percent less than they paid for it," said O'Brien.
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