Spice acquires British Power International

SUPPORT services company Spice has acquired independent consultancy British Power International as part of plans to double the size of its business.

The Leeds-based firm, which is Britain's biggest installer of water meters, acquired BPI in a deal worth up to 10.25m.

BPI provides specialist engineering and consultancy services to network operators, generators, regulators, governments and funding agencies.

The firm, which is based in Colchester, Essex, and employs 70 electrical engineers, was formed via a management buy out in 1999 which was led by Bill Slegg, who will remain with the business following acquisition.

The firm, which operates through its three divisions of UK consultancy, engineering project management and international consultancy, was established in 1978 within the state owned energy sector until privatisation in 1990.

Financial results for the year ended December 31, 2007 show turnover of 5.9m and adjusted operating profits of 1.1m. Net assets were 3.1m.

Spice will pay an initial 7.5m for BPI, which is 6.7 times the company's adjusted operating profits for 2007.

It will pay another 1.35m depending on the firm's results in the year to June 30, 2009 and could pay up to 10.25m for the business depending on the net asset and cash position on completion.

Simon Rigby, chief executive of Spice, said: "BPI has 30 years of experience of working with asset owners and regulators. The acquisition of BPI significantly strengthens our consultancy business and reinforces our position as one of the leading players in the UK electricity sector.

"BPI gives us a significantly enhanced capability in the area of higher value consultancy services adding highly skilled and scarce resource, whilst continuing to build on our cradle to grave UK business delivery model. Around 20 per cent of BPI's revenue is derived from foreign governments, regulators and asset owners internationally."

Earlier this month, Spice reported a 40 per cent in pre-tax profits to 17.1m for the year ending April 30 2008.

Mr Rigby said the group's ambition is to grow the business by 20 per cent a year, leading to a doubling of the business within the next five years.

Following 12 acquisitions last year – the largest of which was the 113m acquisition of Revenue Assurance Services – the group expects to buy about half a dozen companies a year with an average price of 3m to 5m.

Spice is to move up from AIM to the main FTSE list on July 30. The group will enter the FTSE All Share and will have to wait for the next quarterly reshuffle to see if it is elevated to the FTSE 250.