FD Technologies plc has agreed to sell the group’s First Derivative business to US software company EPAM Systems Inc for an enterprise value of £230 million.
The divestment is expected to complete in the fourth quarter of 2024, subject to shareholder approval.
FD Technologies, listed in London and on the Euronext exchange headquartered in Amsterdam, is headquartered in Newry, Northern Ireland. It is a provider of products and consulting services to some of the world’s largest finance, technology and energy institutions.
First Derivative is a dedicated capital markets consulting team. The move follows the merger of FD’s marketing technology division MRP with US firm CONTENTgine, announced in March, which was the first step of a structural reorganisation.
FD Technologies plc says the latest deal will enable the company to focus on its KX software business and provide the funding for it to become cash generative.
It also “generates synergies for KX through a partnership with EPAM to provide professional services capabilities in key markets”.
The deal also enables the repayment of the group’s net debt of around £20m and facilitate the return of excess cash to shareholders.
After customary closing adjustments, transaction and separation costs, net cash proceeds are expected to be approximately £205m.
The group reported that for the first half of the financial year ended 31st August 2024, both KX and the First Derivative Business performed in line with the board’s expectations.
KX delivered annual contract value added of £7.4m, while it said First Derivative’s capital markets consulting customers continue to be cautious in their spending, with revenue for the period of approximately £79m, similar to the second half of FY24.
Seamus Keating, CEO of FD Technologies, said: “This divestment is positive for all stakeholders, benefitting our shareholders and the customers and employees of KX and the First Derivative business.
“For shareholders it enables the group to focus on KX, and provides the resources to deliver on our exciting growth plans while also enabling us to return excess cash. KX and its customers will benefit from a strengthened and broader partnership with EPAM that opens up opportunities in capital markets and beyond, while the First Derivative Business customers will benefit from EPAM’s scale and reach combined with the deep domain skills in capital markets within the First Derivative Business.
“We look forward to providing an update on the positive trading performance and strategic progress of KX at our interim results in November.”