Realys is a design and project management specialist based in Shanghai servicing multinational companies – primarily from Western Europe. The vendors, Benoit Greindl and Eric Goraieb, will remain with the business and retain the remaining 15% of the shares.
Realys has client list that includes Porsche, Peugeot, Areva, Arkema, Clariant, Rhodia and Sodexho. Its design and build project portfolion includes the Belgium Pavilion for the Shanghai World Expo.
Realys’s turnover in the year ended 31 December 2010 was approximately £5m and generated a profit before tax of approximately £0.7m. It employs 25 people.
ISG said that the acquisition of Realys will allow it to access a complementary client base of predominantly Western European multinational companies and in due course to introduce ISG’s network of offices to these clients. Other benefits will include strengthen its management team with people who have a successful track record across China.
At completion £2.4m of the total consideration will be paid. Further consideration of approximately £2.6m will be deferred and payable over the three financial years to 31 December 2013, conditional on the business meeting certain profit before tax targets in each year. Both the initial consideration and deferred consideration will be settled 80% in cash and the balance in new ISG ordinary shares.
If the targets are not met in each of these three calendar year periods, the consideration will be reduced up to a maximum of £0.76m in each of the first two years and £0.62m in the final year. If the profit before tax targets are exceeded over this period the consideration will be increased by up to £0.2m per annum.
The remaining 15% of the shares held by the vendors will be subject to certain put and call arrangements. Following completion of the audit for the year to 31 December 2014 the Realys vendors, under certain circumstances, can require ISG to acquire the remaining shares with the consideration settled 50% in cash and the balance in ISG shares. Similarly ISG has the option to require the vendors to sell it the shares after March 2015, with the consideration settled 80% in cash and the balance in ISG shares. The maximum consideration for the shares is approximately £2.9m depending on the level of profitability.
At completion 237,586 ordinary shares of 1p each in the group will be issued to the vendors based on a price of £1.985 per share. The new ordinary shares will rank pari passu with the existing shares of the group. Application has been made to the London Stock Exchange for the new ordinary shares to be admitted to the Alternative Investment Market and it is expected that admission will take place on 14 April 2011. Following the allotment the total issued share capital of the group has increased to 33,398,858.
Chief executive David Lawther said: “The Realys acquisition is part of our continued international expansion and we are delighted to have this capability within ISG. The acquisition will widen our international client base and provide a broader service offering to our clients in China and Hong Kong.”
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