Empired Limited (ASX:EPD) should trade higher after agreeing to...

Empired Limited (ASX:EPD) should trade higher after agreeing to acquire leading IT services provider Intergen for $17.4 million, fully funded from Empired’s current balance sheet.

The acquisition is subject to a small number of conditions precedent which Empired expect to be satisfied by the end of this month.

Empired will pay the $17.4 million over a three year period with $5 million paid on completion through a combination of cash and shares.

The remaining $12.4 million is subject to FY15 and FY16 performance with $2 million due on 30 April 2015, $5.2 million due on 30 April 2016 and the final $5.2 million due on 30 April 2017.

The acquisition will be earnings accretive and is expected to generate $60 million in revenue on a full year basis.

Intergen is considered the market leader and Australasia’s largest dedicated provider of Microsoft-based application services, employing many of the leading Microsoft experts in New Zealand and Australia.

Intergen employ 370 IT professionals, nearly doubling Empired’s existing workforce to 800 staff and positioning Empired to deliver between $140 million and $160 million in revenue in FY16.

Key management are committed to a long term future with Empired, with financial penalties should they leave within the 3 years post completion.

The company is capitalised at around $80 million.