Manchester-based tech business NCC Group is set to sell Fox Crypto, part of its European Cyber division, to CR Group Nordic AB. The cash deal, valued at approximately €77m, is expected to be finalised by October 2024.
The transaction aims to bolster NCC Group’s financial health and streamline its focus on core Cyber Security operations. This move is part of a broader transformation strategy to optimise the business and drive future growth.
Details of the Sale
NCC Group, based in Manchester, has confirmed the sale of its Dutch subsidiary, Fox Crypto, to CR Group Nordic AB for around €77m (£66m).
The transaction, expected to close by October 2024, represents a strategic step to clear NCC’s outstanding debts and support organic and inorganic growth. The sale will be conducted as a cash deal.
Fox Crypto’s Contributions
Fox Crypto has been a significant part of NCC Group’s European Cyber division, contributing approximately £18m in revenue and £4m in EBITDA over the past year.
The valuation of Fox Crypto was based on an EBITDA multiple of 16.5x, reflecting the unit’s strong financial performance and potential. This sale is not expected to hinder the Group’s ongoing Cyber capabilities.
NCC Group’s Financial Position
As of 31 May 2024, NCC Group’s net debt stood at £38.5m, following the release of its annual unaudited results.
The anticipated net proceeds of about €74m (£62m) from the sale are expected to clear these debts, enabling the company to invest in its core Cyber Security business.
The sale aligns with the Group’s transformation strategy to simplify and focus on Cyber Security.
Statements from NCC Group
Chief Financial Officer Guy Ellis stated, “The disposal is a continuation of the Group’s transformation strategy to simplify the business and create a more focused Cyber Security business.”
The company believes that this deal will bring significant growth opportunities and enhance shareholder value in the future. Both the Cyber and Escode businesses are expected to benefit from a portfolio effect.
Market Reactions
Activist shareholder Kelso welcomed the sale, highlighting that it follows a strong set of preliminary final results from NCC.
Kelso stated that NCC’s valuation, considering its Cybersecurity and Escrow software businesses, is significantly higher than the current market capitalisation. This positive outlook is shared by other market analysts.
NCC Group’s Future Plans
CEO Mike Maddison remarked on the group’s ongoing transformation journey, noting that it is progressing well but still requires further work.
NCC is focusing on enhancing its Cyber capabilities and diversifying its market routes. The development of differentiated brands and a global resourcing model are key elements of this strategy.
A new delivery and operating centre has been established to support these initiatives and streamline operations.
Advisors and Further Developments
IA Global Capital served as the exclusive financial advisor to NCC Group for this deal.
The sale marks a significant milestone in NCC’s strategic plan to enhance its core business areas. The company aims to continue its transformation and deliver long-term value to its shareholders.
The sale of Fox Crypto is expected to significantly improve NCC Group’s financial position and provide a clear path for future growth.
By focusing on its core Cyber Security operations, NCC Group aims to enhance its market position and deliver sustainable value to shareholders.
