£20m Sage deal for payroll specialist
Oct 30 2007 by Iain Laing, The Journal
ACCOUNTANCY software giant Sage has moved further into payroll and human resources software with its second biggest acquisition of the year.
The Newcastle company has bought payroll specialist KCS Global for £20m to help it extend its presence in payroll and human resources following its £17m acquisition of software firm Snowdrop in May.
KCS, which is based in Purley, Surrey, has customers including the Specsavers opticians chain and fashion retailer Paul Smith, and employs around 80 staff, with other offices in Birmingham and Bury St Edmunds, Suffolk.
Sage has bought the company with cash from the current management team, led by managing director Alan Snell, which owns 65% of the business, and Newcastle-based venture capital company Northern Venture Managers holding 35%.
Sage chief executive Paul Walker said: “HR and payroll is an important and growing sector of the business software market.
“This acquisition represents an excellent opportunity for Sage to consolidate its position as one of the leading suppliers in this sector and complements our acquisition of Snowdrop earlier this year.”
KCS chief executive Alan Snell said the deal would not make a noticeable impact on its operations and would continue to employ the same staff.
“This is an exciting strategic move for both KCS and Sage, leaving us with the backing of a leading global supplier of business software and services, while providing Sage with our expertise in the UK mid-market for payroll and HR,” he said.
“KCS offer an excellent fit to the extensive portfolio that Sage provide, and both companies are committed to further developing and enhancing the KCS software and services suite. As our two companies begin to work together, we believe the market will benefit from the synergies that this acquisition brings.”
The acquisition is Sage’s biggest this year apart from its move on Paris-based XRT, which supplies treasury management and payment software to 6,000 companies across Europe and Latin America.
Sage, which now has 13,000 staff worldwide, paid £30m for a 70% stake in the company in September ahead of making an offer to buy the remaining 30% of XRT from its shareholders.
These deals are the latest in a run of major acquisitions by Sage which helped to push up its pre-tax profits by 14% last year to £221.2m.
Sales at the only FTSE-100 tech business roared ahead by 22% to £935.6m last year following seven purchases in the preceding 12 months.
A handful of smaller purchases pushed profits for the six months to March 31 up 12% to £121.8m despite revenues jumping 34% to £574.7m.
Earnings were at the lower end of market forecasts despite contributions starting to come in from its biggest ever acquisition, US-based Emdeon Practice Services, which it bought in August last year for £297m.
Most recently Sage snapped up Oxfordshire-based Snowdrop Systems in a £17m deal, which included the assumption of the company’s debt.
Sage’s acquisitions are opening up new markets, such as the US healthcare sector, and Mr Walker has said the company is pursuing the same strategy this year as in 2006. Sage is also looking to expand in the Far East, having made initial buys in China and Malaysia this year.
