The boards of directors of Kelvin UK Bidco Ltd (Bidco), a newly formed company owned indirectly by funds advised by Apax Partners, and Kin and Carta said they have reached agreement on the terms and conditions of a recommended cash acquisition by Bidco of the entire issued, and to be issued, ordinary share capital of Kin and Carta.
The offer price of 110p is a 41% premium to yesterday’s closing share price of 78p, and a 51% premium to the average share price of 73p over the last six months.
The acquisition values Kin and Carta’s entire issued, and to be issued, ordinary share capital at approximately £203m on a fully diluted basis.
Outlining its reasons for the purchase, Apax said it views Kin and Carta “as a high-quality business with a strong platform in the digital transformation (DX) sector, particularly in view of its impressive roster of blue-chip enterprise customers, recognised brand and capabilities in key areas of the sector”.
“The company is led by an experienced management team, with a clear vision and strategy for the future direction of the business,” it stated.
“However, the changing economic backdrop has highlighted the importance of scale and diversification in the DX sector. Apax believes that as a private company Kin and Carta will be better placed to make the investments necessary to position the business for long-term success.”
John Kerr, Chair of Kin and Carta, said: “Following the successful strategic repositioning of the company to a pure-play global digital transformation consultancy, Kin and Carta is poised to execute the next phase of development for the business.
“We believe the offer to acquire Kin and Carta by Apax Funds represents an excellent opportunity for the company to accelerate ambitious growth plans and scale the business, building on the acquisition and integration of leading data and technology companies, the development of valuable technology partnerships, and the creation of a strong portfolio of enterprise clients.
“Apax’s experience supporting and growing digital consultancy businesses with valuable connections, resources and access to incremental growth capital will enable Kin and Carta to expedite progress on the company’s existing strategy, by bolstering M&A capacity, providing access to new markets, and supporting the management team to deliver profitable long-term growth.
“The Kin and Carta board has concluded that the offer from Apax Funds provides shareholders with the certainty of a cash price today that fairly represents the opportunities and risks inherent in the business and delivery of Kin and Carta's strategy. The board unanimously intends to recommend that Kin and Carta shareholders vote in favour of the acquisition.”
Rohan Haldea, a partner at Apax, added: “We are impressed by Kin and Carta’s unique culture, talented team, and focus on customer impact as evidenced by their B Corp status.
“We have followed the company closely for several years and we have witnessed first-hand how their focus on innovation and strong platform in the digital transformation sector has made Kin and Carta a partner of choice for clients grappling with complex technology problems.
“We believe there is significant opportunity to enhance Kin and Carta’s prospects as a private company, including by pursuing acquisitions that would enhance further its competitive position.
“As significant investors in the space, we hope to draw on our network, experience and operational expertise to support management and the wider team by investing in the business to enhance the value for customers, employees and other stakeholders, building on the firm’s success to date.”
Kin and Carta was founded in 1964 and rebranded from its former guise as St Ives in 2018. Supported with a raft of acquisitions, it has over the past few years transformed to a pure-play DX consultancy “delivering connected outcomes for clients through digital innovation, cloud modernisation, data enablement, and digital optimisation”.
The company’s share price was at its highest point since the rebrand in November 2021, when it stood at 339p. It had reached as high as 625p in 1999.
Kin and Carta’s headquarters are in London, with US headquarters in Chicago, and it employs over 1,800 consultants, engineers, and data scientists globally.
Kin and Carta shareholders will vote on the acquisition which, if approved, is expected to complete during the first calendar quarter of 2024.
