Cloud computing firm iomart Group has acquired competitor Redstation in a deal worth £8 million.
The deal will involve a £6.6 million up-front payment, including £5.1 million paid in cash and £1.5 million issued in shares. A further £1.5 million will be paid subject to certain profit targets being met.
Hampshire-based Redstation owns and operates two data centres and offices, providing hosting services to around 3,000 customers. The company, which has 33 employees, recorded a turnover of £5.2 million in the 12 months up to 31 June 2013.
Earlier this year, Redstation became the first UK customer to sign up to a new high capacity fibre network from Virgin Media Business, offering customers up to 100Gbps connections.
As a result of the acquisition iomart Group now hosts a total of 20,000 servers across the UK, with 10 data centres servicing a variety of sectors across the UK. Iomart is also in the process of increasing capacity at its RapidSwitch data centre in Maidenhead to pre-empt future capacity needs.
Commenting on the deal Angus MacSween, CEO of iomart Group, said that the deal will "consolidate our position as the leading player in the dedicated server market in the UK".
The Redstation deal is the latest in a string of acquisitions made by Glasgow firm iomart this year, also buying up Melbourne Service Hosting, Internet Engineering and Skymarket, while past deals have included rival hosting company Titan.
TechMarketView research director Kate Hanaghan said that the acquisition follows wider consolidation in the booming market for cloud computing and hosting providers in the UK, and is unlikely to be the last such deal.
“The degree of acquisitive activity in the hosting industry continues apace. We can think of many in the last year or so, including: Pulsant acquires ScoLocate, Acquisition number 11 for 6 Degrees, Adapt acquires Sleek, and NetBenefit sold to Peer 1. With so many smaller players, consolidation in the industry is inevitable."
Hanaghan added: “These are exciting times for players, and we have no doubt there will be many more acquisitions to come as firms look to take advantage of the market opportunity.”