The deal, which includes an initial consideration of £4m with potential for an additional £0.3m pending specific customer targets, further strengthens iomart’s secure hybrid cloud strategy.

Incorporated in 2010, Extrinsica quickly positioned itself as a key player in cloud services, becoming one of the first 25 Microsoft Azure CSP partners worldwide in 2017. Its offerings encompass managed Azure Cloud, Azure solution design and implementation services, support and optimisation services, and licensing.

The company reported revenues of £7.4m for the year ended 31 March 2023, representing year-on-year growth of 40%.

The deal with iomart will see Extrinsica CEO and co-founder, Simon Smith, continue at the helm, leading a team of 33 based in the UK. The acquisition bolsters iomart’s Microsoft Azure expertise, providing a platform for accelerated growth and a broadened customer base.

Half of the initial consideration will be met through the issuance of 1,562,500 new ordinary shares in iomart, valued at 128p each. The remaining £2m, along with £3.7m of debt repayment and any earn out consideration, will be paid in cash, sourced from a mix of existing bank facilities and the company’s balance sheet.

The acquisition also includes the possibility of further contingent earn-out payments, ranging from £4m to £7m, dependent upon Extrinsica’s profitability in the 12 months concluding March 2024. Trading in the new shares is set to commence on 8 June 2023.

Upon conclusion of the deal, iomart’s total issued share capital will comprise 112,136,031 ordinary shares of 1 pence each, with one voting right per share, translating into total voting rights of 111,995,258.

Extrinsica’s vendors include the existing management team and the largest shareholder, The Vale Retirement Trust, with c. 25% of all the issued share capital, an investment vehicle for a high wealth individual who does not partake in the business’s management.

Reece Donovan, CEO of iomart Group plc, said: “We are delighted to welcome the Extrinsica team to iomart, providing a large step forward in iomart’s capabilities to support existing and new customers in their use of Microsoft’s Azure cloud platform.

“Simon and the team have been at the forefront of the market developments of Azure since 2017 and have deep skills and expertise in this in-demand area of cloud computing, which will accelerate the initial investments we have made in our own Microsoft resources and capabilities.

“This is a meaningful step in our strategy as we position the Group for its next phase of growth as a leading secure hybrid cloud business.”

Mr Smith added: “Joining iomart marks an exciting phase for our highly skilled, experienced and ambitious team, providing us with a strengthened platform for growth.

“It allows us to leverage joint capabilities, capitalise on our understanding of the markets we operate in and build upon our significant achievements to date.

“iomart has a long pedigree in cloud infrastructure, an impressive customer base and a growth strategy which I believe positions iomart well for future success. The team and I are all incredibly excited to be working as part of the wider group and look forward to being a key part of driving iomart’s ongoing success.”