UXC considers takeover approach as failed Green Loans scheme continues to hit profits

Tech services group UXC says it is considering a takeover bid from an unknown entity as consolidation within the IT sector continues to gather pace.

The surprise takeover bid comes after a period during when UXC itself has bought out a number of smaller firms.

But it’s financial performance has been mixed, with the company also revealing that due to the Government’s decision to halt the Green Loans program, UXC’s Field Solutions Group will record a significant drop in revenue and profits.

The UXC board said in a statement it has considered a number of offers over the past few months, but is now focusing on one in particular.

“While many of these parties currently remain interested, the Board have decided to enter into a period of exclusive due diligence with one of those parties that may or may not lead to a full bid for the company.”

The statement also noted the period of due diligence will expire this month, but the name of the bidder was not provided.

UXC was contacted for comment, but no reply was received before publication. SmartCompany was told finance officer Mark Hubbard and executive director Geoff Lord are on annual leave.

The announcement is just another sign that IT companies are continuing to consolidate in order to continue growth. It also comes after UXC has made a number of acquisitions of its own.

In May, UXC bought troubled software developer MXL, after its parent company, Entellect Sollutions, had its shares suspended due to a failed $26.5 million capital raising. The AFR reported the transaction was completed for about $1 million.

Additionally, in late 2008 UXC offered $23 million for services group Ingena. At the time, finance officer Mark Hubbard told SmartCompany that UXC would be on the lookout for more acquisitions as the downturn worsened.

The firm itself certainly didn’t survive that year unscathed. In August 2009 it reported a 43.7% drop in net profit to $13.9 million, which Hubbard said was due to a flurry of work without the introduction of cost-cutting measures.

But it seems UXC’s troubles haven’t ended yet. While it reported the IT Group business continues to trade strongly, with a record EBITDA expected on revenue of $450 million, the Field Solutions Group continues to struggle.

The consequences of the cancelled Green Loans scheme, the company said, are twofold: “A significant reduction in turnover to approximately $270 million”, and “continued recognition of the losses for discontinued operations in second half… this will approximately offset the profit from continuing operations for the full year”.

The announcement also comes after UXC announced in February it would undertake a strategic review of the business