IMImobile to buy multi-channel messaging app provider Infracast

IMImobile has agreed to buy multi-channel messaging applications provider Infracast for an initial consideration of £8.2m in cash and shares.

The AIM-listed cloud communications software and solutions provider said the deal is highly complementary to both companies' product set and customer base and should be immediately earnings-enhancing.

Infracast is a technology partner to Telefonica, and through that partnership provides services to a number of tier one banks. Following the integration of the acquisition, the enlarged group will provide communication software and services to four of the top five tier one retail banking groups in the UK.

IMImobile said the group has a good track record of revenue and gross profit, with more than 90% recurring revenues. For the year ending 31 May 2016, reported revenue and gross profit came in £10.4m and £3.1m, respectively.

Chief executive officer Jay Patel said: "The acquisition of Infracast helps us strengthen our capabilities and opportunities in the financial services sector, a sector which is profoundly impacted by the shift of consumer behaviour towards digital and mobile technologies.

"We expect to rapidly integrate the acquisition over the next six months and take advantage of the close synergies in terms of technology, partnerships, client base and the experienced senior management team."

Infracast's founder David Angers and commercial director Chris Hicks have agreed to remain part of the wider group and will join IMImobile's senior management team.

Whitman Howard said this looks like "another high quality acquisition" and an "ideal fit" as it lifted its price target on the stock to 220p from 200p and retained its 'buy' rating.

"The group continues to benefit from the integration of its acquisitions, cross-selling ability, and growth in new markets. IMImobile offers a compelling combination of growth, recurring revenues, strong margins and cash conversion," it said.

At 1452 BST, the shares were down 0.6% to 174p.