Manchester-based NCC Group has decided to sell its Dutch unit, Fox Crypto, to CR Group Nordic AB.
The sale, valued at about €77 million (£66 million), is part of NCC Group’s strategy to streamline its operations and focus more on its core cybersecurity capabilities.
NCC Group’s Sale of Fox Crypto
Manchester-based NCC Group has finalised a deal to sell Fox Crypto, a part of its European Cyber division, to CR Group Nordic AB. The transaction, valued at approximately €77 million (£66 million), is expected to be completed by October 2024. This sale is a part of the company’s ongoing strategy to simplify and streamline its operations.
Financial Impact and Debt Clearance
The financial implications of this sale are significant. The unit contributed revenue of around £18 million and EBITDA of approximately £4 million in the 12 months ending May 2024. The deal was based on an EBITDA multiple of 16.5x, effectively valuing the unit at £66 million. This sale will allow NCC Group to clear its net debt, which stood at £38.5 million as of May 2024.
Strategic Growth and Transformation
The cash generated from this transaction will not only clear existing debt but also facilitate both organic and inorganic growth within NCC Group’s cybersecurity business. Guy Ellis, the Chief Financial Officer, emphasised that this sale is a continuation of the Group’s transformation strategy aimed at creating a more focused cybersecurity business.
Impact on Cyber Capabilities
Despite the sale, NCC Group insists that the disposal of Fox Crypto will not adversely impact its ongoing cyber capabilities. Fox Crypto provided cryptographic products and encryption services, but the company believes it can continue to grow and improve its cybersecurity offerings without this unit.
Market and Shareholder Reactions
The market reacted positively to the deal. Activist shareholder Kelso welcomed the sale, stating that it supports their belief that NCC is undervalued. Kelso pointed to NCC’s strong preliminary final results as a factor bolstering their confidence in the deal’s long-term benefits.
Financial Performance Overview
Despite these figures, Kelso remains optimistic about NCC’s future, citing the discrete value of its cybersecurity and escrow software businesses.
Chief Executive’s Vision
Maddison’s vision for the future includes continued development and refinement of the company’s cybersecurity capabilities.
Advisory and Support
IA Global Capital served as the exclusive financial advisor to NCC Group for this deal, offering crucial support and guidance throughout the transaction process.
This sale is a critical step for NCC Group as it aims to clear its debts and strengthen its focus on cybersecurity.
With the financial backing and strategic roadmap in place, NCC Group looks forward to a more streamlined and focused future in the cybersecurity sector.