Under the agreement KTS says it will initially pay £700,000 in cash and issue 45 million KTS shares.

An additional payment of up to £300,000 will be made in cash or shares if Arcontech achieves turnover over £1.2 million and up to £2.2 million in the 12 month period immediately following the completion of the acquisition.

Founded in 1979, Arcontech develops middleware system for real time publishing, distribution and aggregation of financial data, which can be integrated into any software platform.

KTS says the business has strong and contractual relationships with a broad base of blue chip customers including major investment banks, data vendors and contracts for difference (CFD) brokerages. In its last audited accounts to 31 July 2006 Arcontech generated profits before tax of approximately £181,000 on turnover of £982,000 and as at 31 July 2006 it had net assets of £114,000.

KTS says the purchase is in line with its strategy to complement organic growth with selective acquisitions. Arcontech will provide KTS with a product set that is complementary to its existing display application technology.

Marc Pinter-Krainer, KTS chief executive, says: "In an increasingly sophisticated market which has strong drivers, not least The MiFiD regulatory changes, the combination of the two businesses will provide a compelling offering and opportunities to cross sell our combined product sets to an enlarged customer base."

The Arcontech unit will be integrated into KTS' London offices. Andrew Miller, who is currently a director of Arcontech, will join the board of directors of KTS on completion as an executive director.

KTS says completion of the acquisition is conditional on it placing new shares to provide working capital for the enlarged group.