20/11/2018 – Procurri Corporation, a Singapore-headquartered independent provider of data center equipment and IT lifecycle services, has made a move to acquire its United State-based joint venture company Rockland Congruity LLC.
Under the conditional sale and purchase agreement, Procurri said it will take over the remaining 49 percent stake in the JV from Congruity LLC for US$22 million. This acquisition, according to the Singapore firm can further strengthen its lifecycle services businesses.
“Turning Rockland into a wholly-owned subsidiary will sharpen the group’s competitive edge at a time when its peers in the third-party IT maintenance industry are rapidly scaling up through mergers and acquisitions to increase market share,” said Sean Murphy, the Chairman and global CEO of Procurri.
“This is important as companies worldwide are increasingly turning to service providers that can be a one-stop shop for all their IT needs, not just for a single location but across multiple geographies,” he added.
Procurri had earlier chosen to enter the US market through a joint venture with Congruity in January 2017, offering third-party IT maintenance and support services. The deal was also made with Procurri holding the option to buy out Congruity’s stake under specific conditions.
Congruity is a provider for enterprise storage support. The company claims to possess a pool of senior engineers that are certified by a number of original equipment manufacturers (OEMs) including EMC, NetApp, HDS, Brocade, and VMware.
The partnership had since been profitable with the joint venture has generated a revenue of US$28.3 million and deferred revenue of US$7.5 million in the first nine months of 2018. This is a significant increase from US$24.1 million and US$7.2 million deferred revenue generated for the whole of 2017.
“Besides improving decision-making efficiency, full integration will enable us to compete more effectively in the current business environment. The acquisition is also in line with our goal to have a stable income stream through our lifecycle services business,” Murphy stressed.
Regarding this acquisition, the deal is subject to the approval of all relevant regulatory authorities as well as Procurri shareholders. As this is a major transaction, Procurri shareholders will get to vote on the proposed deal at an extraordinary general meeting to be convened at a date to be announced.
The US$22-million consideration will be paid in two tranches, that is US$12 million upon completion of the purchase of the 49 percent stake, and US$10 million in January 2020. Cash will be the primary mode of payment for the transaction, which will be funded using internal resources or bank loans.
Congruity LLC is prohibited from competing with Rockland Congruity for the next three years after the date of transaction.