Shareholders in Newry’s FD Technologies are to receive £120 million as a result of the decision to sell the major part of the business to US software giant EPAM Systems.
The Pennsylvania-based digital technology company agreed to pay £230m for First Derivative in October.
The deal for the digital services company will see 1,800 people transferred to EPAM, including around 650 staff in Newry and Belfast.
FD Technologies’ largest shareholder is US-based Irenic Capital, which holds a 20% share.
The family of First Derivatives’ late founder Brian Conlon, have a 13.4% share in the business.
The sale, which is expected to be completed on Monday, will leave KX as FD Technologies’ sole operating business.
It will be a much smaller operation, employing 500 people, including around 100 in the north.
KX, which the group said will be “a pure-play, high-growth software business”, will retain £54m of the sale proceeds, with the remaining £32m used to repay debts.
The chief executive of FD Technologies, Seamus Keating, said it will help the KX business become profitable “irrespective of the economic weather over the next couple of years” and help attract investors.
“It also gives the business capacity to accelerate, where we see significant opportunity and it gives confidence to have a strong balance sheets.”
Half-year results published by the London-listed group on Tuesday show FD recorded a pre-tax loss of £11.1m on its continuing operations for the six months to August 31 2024.
Group revenue dropped 7% to £118.2m, but KX revenue increased 5% to £39.5m.
Chief finance officer Ryan Preston said KX had invested heavily in R&D, sales and marketing for the business during the period.
He said the group is committed to making KX “cash positive” by 2027.
“We’re comfortable we will be able to get there,” he added.
FD also took a £1.9m loss linked to the former MRP business, which was sold last year to US-based CONTENTgine.
FD retains a 49% share of the entity, which now trades as pharosIQ.
Mr Preston said the first-half loss was linked to restructuring and setting up the joint enterprise.
“There has been really good growth in quarter three and it’s expected to be profitable.”
Seamus Keating said FD Technologies expect to remain a London-listed business post-sale, but hinted that the company could rebrand in future.
“When we get into our next fiscal event, those are good questions for the board to consider.”
Looking ahead, KX chief executive Ashok Reddy described the data business as “a high growth” operation.
He said what started out as a software business, supporting real-time decision making on Wall Street, had evolved into a high performance analytical database, with the company now embracing generative AI to enter other sectors.
“We are now working in aerospace and defence and high-tech manufacturing,” he said.
“That is what is giving us confidence that we can go after even more verticals as we build our partnerships.
“The goal is a have a solid product-based business, without needing a lot of services.”
FD said it expects to retain a close working relationship with EPAM.
