Redstone acquires Fujin Systems

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Redstone acquires Fujin Systems

Microscope contributor

Redstone has acquired Ethernet and data centre services provider Fujin Systems for £400,000 but the price tag could rise to £2.9m depending on future earnings.

A restructure of Redstone has already seen management carve up the group - closing the BSF arm, selling the PBX maintenance unit and more recently the Irish reselling operation - as they re-shape the business into a managed service provider

"The acquisition is an initial and important strategic step in adding to Redstone's market proposition as we reposition the business as a leading network-based provider of end to end managed services," said Redstone chief executive Tony Weaver.

 

Incorporated in late 2009 by former Calyx employees Clive Atkins and Paul Toms, Brocade and Arista partner Fujin Systems specialises in data centre consolidation, next generation security and Ethernet installation and management.

Both Weaver and Redstone chairman Ian Smith invested in Fujin Systems when it was formed last year and each owns a 21% stake.

In the nine months ended 30 September 2010, it made a loss before tax of £57,000 on the back of £1.4m sales. Customers include Express Newspapers and the University of Westminster.

On completion of the acquisition Redstone will pay £400,000 in cash but if Fujin Systems achieves profit before tax of £560,000 for the 12 months ended 31 October 2011 it will pay another £500,000 in cash and £2m in new ordinary shares.

The deal was led by Redstone CFO Peter Hallett and non-exec directors.

"We have agreed a deal structure which aligns the consideration payable by Redstone to the earnings to be delivered by Fujin," said Hallett, who added that this would financially motivate management to build upon sales growth to date.


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