West Midlands software and IT services provider Sanderson is set to extend its product offering after buying West Yorkshire and Hampshire business Megabyte.
The Coventry firm has acquired Megabyte for up to £1.5 million and two million shares.
Up to £500,000 additional cash and a further one million shares may be payable if Megabyte reaches certain performance targets, Sanderson said.
The shares are valued at £495,000 based on the average closing mid-market price of 49.5p over the ten business days preceding February 23.
David O'Byrne, managing director of Sanderson, said: "This acquisition will significantly extend our product offerings in the growing multi-channel retail market, and will provide good cross-selling opportunities with our existing mail order, retail and distribution operations." Megabyte is based in Bradford and Swanmore and is a provider to the retail sector.
For the 12 months ending on June 30, 2005, Megabyte achieved turnover of £3.79 million, compared with £3.92 million in 2004. Profit before interest and tax stood at £23,602, down from £183,982, and gross assets were £2.1 million. Sanderson expects the acquisition to be "earnings neutral" in this financial year and "earnings enhancing" thereafter.