Under the agreement, United Utilities subsidiary Vertex has offered 42 pence per Marlborough Stirling share, representing a premium of 46.1% to yesterday's closing price of 28.75 pence. After accounting for Marlborough Stirling's net cash balance as at 31 December, 2004 and exercisable options, the offer price translates into an enterprise value for Marlborough Stirling of approximately £72.2 million.

Marlborough Stirling put itself up for sale in December after its second profit warning in a month sent shares in the vendor tumbling to 30.5 pence. Confirmation of the acquisition comes as the vendor posts a 14% fall in turnover to £98.8 million and a pre-tax loss of £11 million for 2004, compared with a profit of £0.9 million in 2003.

Marlborough Stirling has three divisions, the largest of which is its life and pensions business, which in 2004 generated turnover of £59.3 million. The division's BPO clients include Sun Life Financial of Canada, Royal Liver and Bank of Scotland. The business has seen a rapid decline in demand for stand-alone software and a marked shift towards outsourcing in preference to in-house management of administration.

Vertex, which primarily services the utilities and governement sector, believes that Marlborough Stirling's progress in life and pensions outsourcing has been held back by a lack of scale, and consequent failure to secure new business.

For the year ended 31 March, 2004, Vertex's turnover was £386.9 million on which it earned gross profits of £24.6 million. The company believes that it can provide Marlborough Stirling with the stability and financial backing it requires to successfully secure large-scale outsourcing contracts.

Tom Drury, managing director of Vertex, comments: "The rationale for this acquisition is that it will provide Vertex with an entry point into the business process outsourcing segment of the financial services market, which we believe offers significant growth opportunities."