IT services provider Maxima Holdings has recommended an all share bid from Redstone when it failed to find a better way to sell its business.
Managed telecoms services provider Redstone boss Ian Smith took over as executive chairman of Maxima in October 2011, having joined the board one month earlier. At that time, Maxima raised £2m at 20p a share in order to provide working capital for the business.
Shares in Redstone rose 21% to 0.95p on the back of the deal. That values each Maxima share at 26.6p a share and the company at £9.4m – compared with net assets of £8.4m at the end of May 2012. The Maxima share price is 23.75p. Redstone intends to raise £3m at 1p a share in order to finance the integration and cost savings.
There should be cost savings of £2.3m a year from putting the two companies together, including £900,000 from dropping the Aim quotation of Maxima. Longer-term, the data centre operations will be consolidated. The enlarged group will be able to bid for contracts that Redstone would not have been able to previously.
In the year to May 2012, Maxima made a £6.3m loss on revenues of £28.2m. Net debt was £3.9m at the end of May 2012 thanks to money raised in non-core disposals.
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