chombosan - Fotolia
Managed services and smart cities player RedstoneConnect has opted to focus on becoming a software focused operation selling off the rest of its operations.
The firm has been made up of managed services, systems integration and the software division and is now choosing to focus solely on the last piece of the business.
The Communica Holdings systems integration business and Commensus managed services operation are being bought by Excel I.T. Services for £21.6m in cash.
The firm stated that since the firm had acquired Connect IB in March 2016 the focus had been on deepening the software capabilities and the feeling was that it was destined to be a higher margin business.
"The Systems Integration and Managed Services divisions operate in more mature markets and therefore the Board believes that higher levels of growth are available to the Company's Software division," stated a note to investors.
The firm also takes the view that changes to the way people work will continue to drive the need for workplace management solutions.
"The proposed disposal of our Systems Integration and Managed Services divisions represents another exciting development in the evolution of our business. Since the acquisition of Connect IB in 2016, we have been developing our Smart Software solution capabilities with a particular focus on OneSpace, our occupancy management software solution," said Mark Braund, CEO of RedstoneConnect.
"Employee mobility and agile working is driving demand as commercial real estate becomes more of a user experience business. We firmly believe that the significant global demand for workspace management solutions coupled with the market leading suite of services already being deployed within our Software division, creates an ideal base from which to accelerate our growth," he added.
Excel will run the acquired business under the ExcelRedstone brand and the firm is keen to use the acquisition to strengthen its position in the market.
“By combining these already successful business operations we are creating a unique new force in the data centre and intelligent infrastructure markets, with the scale, quality and breadth of competencies needed to meet clients’ increasingly complex and critical IT infrastructure requirements," said Excel I.T. CEO Barry Horgan.
“ExcelRedstone will have an enviable client list from day one, including many of the world’s leading financial institutions, multi-national corporations and largest hyperscale data centre providers," he added.
The timing of the sale announcement came with RedstoneConnect's full year fiscal numbers, which showed that for the 12 months ended 31 January revenues had climbed by 15% to £47.6m. Pre-tax profits had also climbed from £1.3m to £2.4m.