Inspired Energy plc, a UK energy procurement consultant to UK corporates, has entered into a conditional agreement to acquire Direct Energy Purchasing Limited (“DEP”), an energy procurement adviser to predominantly multi-site corporates, for a consideration of up to £4.0 million. Inspired Energy has also raised £1.0 million (before expenses) through a placing of new ordinary shares.
The total consideration for the Acquisition comprises initial consideration of £2.0 million to be satisfied by a cash payment of £1.25 million and the issue of 21,428,572 ordinary shares in the capital of Inspired plus two deferred payments of up to £1.0 million each based primarily upon the financial performance of DEP in the two financial years ending 31 March 2013 and 31 March 2014.
The principal terms of the Acquisition Agreement are described in more detail below.
Inspired has raised £1.0 million (before expenses) through an oversubscribed placing by Shore Capital Stockbrokers Limited of 28,571,429 new ordinary shares of 0.125p each at a price of 3.5p per Placing Share, which will provide additional financing for the Group.
The initial cash payment in respect of the Acquisition will be funded from the Group’s existing cash resources and the Placing. The deferred consideration of up to £2.0 million is expected to be funded from existing cash resources as at completion and future cash-flows generated by the enlarged group.
Overview of DEP and the Acquisition
DEP is an energy purchasing management and consultancy business focused on providing consultancy and bureau services to multi site corporates, with specialisms in the healthcare and specialty retail sectors
The acquisition brings access to new sector verticals and increases the average size of clients across the enlarged Group’s portfolio, complementing and building on Inspired’s growth strategy
In the year ended 31 March 2011, DEP achieved revenues of c. £1.2 million and profit before tax of c. £0.7 million. As at 31 December 2011, the contracted order book stood at c.£1.7 million. DEP currently serves 68 clients, and manages the procurement and administration of in excess of 6,000 energy meters across the UK.
DEP’s strong retention rates underpin stable revenue progression
Based in Bolton, DEP employs 18 staff and has 68 customers across the UK
Commenting on the Acquisition, Janet Thornton, Managing Director of Inspired said: “We are delighted to conclude our first acquisition since our admission to AIM in November 2011. The acquisition of DEP complements our growth strategy, providing access to new sector specialisms as well as increasing our average size of client and geographic reach. We believe that the acquisition of DEP will benefit both Inspired and DEP. The acquisition of DEP increases the breadth of our target customer base and brings operational benefits, including increasing our supplier diversification and providing a platform for increased real time reporting. Similarly, we believe that by becoming part of the Group, DEP’s customers can benefit from our exclusive products, increased buying power and access to our highly innovative and respected risk management team.”
UK, Kirkham, Lancashire and Bolton, Lancashire