Source: NetSol Technologies
NetSol Technologies, Inc. (NASDAQ: NTWK), a developer of proprietary software applications and provider of information technology (IT) services, today announced that it has signed a definitive agreement to acquire U.K.-based CQ Systems Ltd., a well-known provider of asset based financial solutions in the U.K. market.
Founded in 1986 as Custom Quest Ltd., CQ Systems has a revenue run rate of approximately $5 million, with net profit of approximately $1 million. NetSol will acquire 100 percent of CQ Systems, with upfront cash and restricted NetSol stock equivalent to 50.1 percent of the total consideration. The balance will be paid on an earn-out formula over the following 12 months.
The acquisition remains subject to regulatory approval and other customary closing conditions, and is expected to close by the end of the first calendar quarter of 2005. As NetSol is currently planning to issue only 25 percent of the consideration in shares of NetSol restricted stock, NetSol is not intending to seek shareholder approval of the transaction. However, should it be determined that shareholder approval is necessary, NetSol will seek approval in its next proxy statement prior to closing the transaction. The terms of the transaction will be available in the current report filed on form 8-K with the Securities and Exchange Commission. Maxim Group, LLC, a full service investment-banking firm headquartered in New York, provided negotiation and advisory services for NetSol on the acquisition.
CQ Systems provides sophisticated accounting and administrative software, along with associated services, to leasing and finance companies located in Europe, Asia and Africa. The products include software modules for asset finance, consumer finance, motor finance, general finance and insurance premium finance. The modules provide an end-to-end contractual solution - from underwriting, contract administration and accounting, through asset disposal and remarketing. Customers include notable European companies such as Scania Finance GB, DaimlerChrysler Services, Broadcastle PLC, Bank of Scotland Equipment Finance and Deutsche Leasing Ltd.
"NetSol Technologies' product and service mix provides the competitive advantage we need to create new opportunities within our existing client base, and drive new business within our target markets," commented CQ Systems Managing Director Andy Elliott. "Its strong off-shore development capabilities will provide significant value for our clients, while NetSol's SEI Level 4 ranked development team ensures that our clients receive the best quality software products available. Our entire staff looks forward to joining the NetSol Technologies family."
"CQ Systems' business model complements our growth strategy," commented NetSol CEO Naeem Ghauri. "The company's product offering is synergistic to that of NetSol, as it has an established and balanced mix of recurring revenue flow from the European marketplace, and a strong foothold with a comparable target audience. We anticipate considerable growth within the European marketplace as we blend and expand our product offering by leveraging our offshore technology infrastructure to contain costs and improve margins."
NetSol Technologies Chairman Najeeb U. Ghauri added, "The acquisition of CQ Systems is in line with the overall growth and acquisition strategy that we have shared with our shareholders and the financial community over the past several months. This development is exciting to all of us as it will enhance the value of our shareholders investment, while further strengthening NetSol's fundamentals and long-term sustainability."