Xploite is returning up to £9.5m to shareholders after deciding the funds were not required for large scale acquisition targets but it will instead focus on smaller candidates with a SaaS model to fit with its last trading brand Storage Fusion.
When the AIM-listed firm sold storage reselling and managed services business Anix to ACS early in the summer it expected to promptly return to the acquisition trail. However, this morning it told the City that strategy had changed following a "review".
"The board feels that, in order to continue with its policy of delivering value for shareholders through a 'buy and build' strategy, the company should focus on smaller acquisitions with less requirement for significant cash investment," said Xploite.
After considering its options on the best use for cash and distributable reserves, Xploite has instructed broker Brewin Dolphin to buy 46% of the 19m issued shares at 50 pence per unit - a 10% premium on this morning's price.
Ian Smith, chief executive at Xploite, said this left the business with just under £8m to fund expansion plans - it had £9.3m when it began buying up storage services firms in 2007 - and already had its sights on some targets.
"We will be looking for acquisitions that will be synergistic with the remaining Storage Fusion brand," he told MicroScope.
Storage Fusion - the software business that was pulled out of data centre management acquisition Itheon - sells SaaS-based storage analytics tools but has struggled this fiscal year and is expected to record a "significant loss".
The SRA software lacked demand because it was sold on an enterprise license basis but management reckon that since they overhauled the pricing strategy from July, it has secured 11 new customers including some household names.
This should reduce "the cash burn of the business" and the priority for the board is to ensure Storage Fusion is cash positive on a month-to-month basis.
Shareholders have until 19 November to sell their stock.