In a transformative deal, FD Technologies finalises the sale of the majority of its business to US firm EPAM Systems, impacting employees and reshaping future operations.
In a significant shift for FD Technologies, shareholders are set to receive £120 million following the impending sale of the majority of the business to US software firm EPAM Systems. The acquisition, which is valued at £230 million, was finalised in October, signalling a transformative phase for both companies involved.
The agreement will result in the transfer of approximately 1,800 employees to EPAM, with around 650 staff based in Newry and Belfast. This marks a major restructuring for FD Technologies, with the sale expected to conclude on Monday. Post-sale, KX will emerge as the sole operating entity under FD Technologies’ umbrella, drastically reducing its scale to approximately 500 employees, including 100 positions in Northern Ireland.
Irenic Capital, based in the United States, stands as the largest shareholder in FD Technologies, holding a 20 per cent stake. The family of the late founder Brian Conlon possesses a 13.4 per cent share. The implications of this sale are significant for KX, which the company describes as a “pure-play, high-growth software business.” Following the transaction, KX will retain £54 million of the sale proceeds, while £32 million will be allocated for debt repayment.
Seamus Keating, the chief executive of FD Technologies, expressed optimism about the future of KX, stating that this transition will enable the company to achieve profitability irrespective of economic fluctuations over the next few years. He emphasised the potential for accelerated growth and the confidence that comes with a strengthened balance sheet.
In a recent release of half-year results, FD Technologies reported a pre-tax loss of £11.1 million for ongoing operations for the six months ending August 31, 2024. The group’s revenue experienced a 7% decline, totalling £118.2 million, contrasted by a 5% increase in KX’s revenue, which reached £39.5 million. Chief Financial Officer Ryan Preston highlighted significant investments in research and development, as well as sales and marketing within KX during this period, affirming the group’s aspiration to achieve cash positivity by 2027.
The financial landscape was further affected by a £1.9 million loss attributed to the former MRP business, which was divested to US-based CONTENTgine in the previous year. Although FD retains a 49% interest in the new entity, trading as pharosIQ, the first-half loss was primarily linked to restructuring efforts and the establishment of a joint venture with CONTENTgine.
Looking towards the future, Ashok Reddy, chief executive of KX, reaffirmed the company’s trajectory as a high-growth operation. Originally a provider of software for real-time decision-making on Wall Street, KX has transformed into a high-performance analytical database and is now integrating generative AI into its offerings. Reddy noted the company’s expansion into new sectors, including aerospace, defence, and high-tech manufacturing, and expressed confidence in pursuing additional verticals through strategic partnerships.
FD Technologies anticipates maintaining a collaborative relationship with EPAM Systems following the sale, underscoring an ongoing connection between the two firms amid significant changes in its operational structure. As FD Technologies prepares for this new chapter, discussions regarding a potential rebranding and strategic direction are likely to take place in the coming fiscal events, with the aim of positioning KX for future growth in an evolving technological landscape.
Source: Noah Wire Services
- https://fxnewsgroup.com/forex-news/platforms/fd-technologies-to-sell-first-derivative-business-to-epam-systems-for-230m/ – Corroborates the agreement between FD Technologies and EPAM Systems for the sale of the First Derivative Business for £230 million.
- https://www.marketscreener.com/quote/stock/FD-TECHNOLOGIES-PLC-4003789/news/EPAM-Systems-Inc-has-entered-into-an-agreement-to-acquire-First-Derivatives-Limited-from-FD-Techno-48022749/ – Details the terms of the Sale and Purchase Agreement, including the enterprise value and expected completion in the fourth quarter of 2024.
- https://www.financedirectoreurope.com/news/epam-to-acquire-first-derivative/ – Provides information on the acquisition, including the transfer of approximately 1,800 employees to EPAM and the expansion of EPAM’s financial services practice.
- https://financefeeds.com/epam-to-acquire-first-derivative-from-fd-technologies/ – Confirms the acquisition and the impact on FD Technologies, including the reduction in scale and the focus on KX as the sole operating entity.
- https://www.aoshearman.com/en/news/fd-technologies-plc-to-sell-first-derivative-business-to-epam-systems – Mentions the expected completion of the divestment in Q4 2024 and the advisory roles of A&O Shearman in the transaction.
- https://fxnewsgroup.com/forex-news/platforms/fd-technologies-to-sell-first-derivative-business-to-epam-systems-for-230m/ – Explains the post-sale allocation of proceeds, including debt repayment and retention by KX, and the expectation of positive cash flow for KX by FY27.
- https://www.marketscreener.com/quote/stock/FD-TECHNOLOGIES-PLC-4003789/news/EPAM-Systems-Inc-has-entered-into-an-agreement-to-acquire-First-Derivatives-Limited-from-FD-Techno-48022749/ – Details the financial implications, such as the net cash proceeds of approximately £205 million and the use of proceeds for debt repayment and KX’s business plan.
- https://financefeeds.com/epam-to-acquire-first-derivative-from-fd-technologies/ – Highlights the performance of KX, including its revenue increase and investments in research and development, sales, and marketing.
- https://fxnewsgroup.com/forex-news/platforms/fd-technologies-to-sell-first-derivative-business-to-epam-systems-for-230m/ – Mentions the divestment of the MRP business to CONTENTgine and FD Technologies’ retained interest in pharosIQ.
- https://www.financedirectoreurope.com/news/epam-to-acquire-first-derivative/ – Discusses KX’s transformation and expansion into new sectors, including aerospace, defence, and high-tech manufacturing, and its integration of generative AI.
- https://financefeeds.com/epam-to-acquire-first-derivative-from-fd-technologies/ – Confirms the anticipated collaborative relationship between FD Technologies and EPAM Systems post-sale and the potential for rebranding and strategic direction discussions.
