Procurri to buy 49 percent of Rockland Congruity it doesn’t already own for US$22 million

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

Procurri Corp. said on Sunday that it will buy the 49 percent of U.S.-based joint venture Rockland Congruity it doesn’t already own from Congruity LLC for US$22 million in a bid to strengthen its Lifecycle Services  business.

The joint venture was formed in January 2017 to offer third-party IT maintenance and support services and to sell refurbished enterprise hardware, it said in a filing to SGX on Sunday.

Sean Murphy, Procurri’s chairman and global CEO, pointed to competition in the third-party IT maintenance industry as a driver of the acquisition.

“Besides improving decision-making efficiency, full integration will enable us to compete more effectively in the current business environment. 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,” Murphy said.

Procurri said it had aimed to use the Rockland joint venture to develop a stable income stream and in-house maintenance capabilities.

For the first nine months of 2018, Rockland had revenue of US$28.3 million, with deferred revenue of US$7.5 million, the filing said.

The consideration will be paid in two tranches, with US$12 million paid when the stake buy is completed and US$10 million to be paid in January 2020, the filing said. The deal will be funded using internal resources and/or bank loans, Procurri said, adding that some of the deal will be financed from the remaining around S$3.96 million in net proceeds of its initial public offering in July 2016.

Procurri has the option to pay up to US$2 million of each tranche via the transfer of shares, the filing said. The consideration can also be adjusted if Rockland’s aged inventory, or inventory purchased before 1 August 2017, exceeds US$250,000 at the end of 2018, it said.

Under the deal, exiting joint venture partner Congruity will be prohibited from competing with Rockland for three years, it said.

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