Published on: July 4, 2016
Another complimentary acquisition
Following K3’s April 2016 purchase of DdD Retail, the group has announced a further complementary acquisition in the form of Merac, developer of a leading solution for the visitor attractions and leisure sector. Paying an initial £1.27 million in cash, management expects the deal to be immediately earnings enhancing. The deal will increase K3’s presence in the sector and is in line with its strategy of seeking acquisitions which accelerate growth and also increase sales of K3-owned intellectual property (IP) – in this case, also bolstering the group’s position in an important niche market. The trading update which accompanied the DdD acquisition noted a ‘very healthy’ pipeline of new deals. We expect K3 to issue a pre-close update for the financial year to the end of June 2016 later in July. Ahead of that, we make no changes to estimates while acknowledging the supportive impact that the acquisition will have on future earnings estimates in the form of increased levels of recurring income and profit.