Ailing UK software and services firm ECsoft Group Plc is in discussions to be acquired by, or merge with, a similar or larger IT services vendor, and that IT consulting provider Ciber Inc has acquired an 8.8% stake in the company.
The announcement was made by the London-based company in a statement to explain the recent 22% increase in its share price. The company reported that it had been informed by Greenwood Village, Colorado-based Ciber that it had acquired 895,667 shares in ECsoft at up to 175 pence ($2.77) per share, giving Ciber an 8.8% share in the company.
ECsoft went on to say that it is currently reviewing its options, one of which is an acquisition or merger, and that it has started discussions with a number of third parties. The company said the discussions are at a preliminary stage and that it will ensure that in any discussions, recognition is given to its cash holdings and operating business.
The company said, its cash position stood at 27m pounds ($42.7m) on October 31, which equated to 242 pence ($3.83) per ECsoft share.
ECsoft has been in an acquisitive mood itself this year. In April it acquired the Danish services business of CMG Plc for 225,000 pounds in cash ($356,040) and the repayment of a 1m pound ($1.58m) loan. That was followed in July by the acquisition of Dutch Oracle consulting specialist, BTS Consulting BV for 1.5m euros ($1.5m) in cash and shares.
The acquisitions couldn’t save the company from reporting a pre-tax loss for the first half of the year of 5.8m pounds ($9.2m) on revenue that fell 39% to 20.7m pounds ($32.8m). The loss compared to a pre-tax gain of 2.8m pounds ($4.4m) the previous year.
The loss included 2.1m pounds ($3.3m) of restructuring charges, which saw the company reduce its headcount from 803 at the beginning of the year to 646 at the end of June following the disposal of its German operation through a management buy-out, as well as retrenchment in Sweden.