(Alliance News) - Capita PLC on Tuesday announced an agreement to sell its software business to a subsidiary of MRI Software LLC.

Shares in Capita surged 18% to 18.30 pence in London on Tuesday morning.

The London-based outsourcing and professional services company said the deal values the standalone software business, Capita One Ltd, at GBP200 million on a cash-free and debt-free basis.

Capita expects to complete the disposal towards the end of August, it said.

Capita added that before closing the deal, it expects to receive a GBP4.8 million cash dividend from Capita One. Upon completion of the disposal, Capita should receive gross cash proceeds of around GBP207 million.

Capita is selling Capita One to Orchard Information Systems Ltd, a wholly-owned subsidiary of MRI Software LLC.

Based in Solon, Ohio, MRI Software is "a leading provider of real estate software solutions that transform the way communities live, work and play", Capita said.

It added that MRI "intends to support Capita One's growth plans and further develop its product portfolio and customer base".

The disposal, Capita said, follows an evaluation of "certain activities" it has deemed "not core to the group's future strategy".

Capita believes that the deal "will realise material value for Capita's shareholders and the net cash proceeds will provide the group with additional cash resources to strengthen its financial position and further reduce indebtedness".

"Although short term pro forma results are expected to be impacted by the disposal, Capita is maintaining its medium-term guidance for the continuing group based on the benefits of the cost saving and technology initiatives previously outlined," it added.

Chief Executive Officer Adolfo Hernandez commented: "As I outlined recently at our capital markets event, Capita's strategy is to become a more focused company, prioritising businesses where we can deliver material opportunities in the future, with greater simplification and cost reduction.

"Capita One is a high-quality business that has performed exceptionally well. Under its new owner, it is well positioned to benefit from investment in its strategic growth. We remain committed to the local public service market but want to see Capita One be set up for continued success with an owner that can deliver the investment it needs."

By Emma Curzon, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.