UPDATE:Corero Eyes Acquisitions Following GBP6.5M Fundraising

14th Jul 2010 13:03

(Adds details throughout.) By Tommy Stubbington Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Corero PLC (CORO.LN) said Wednesday it plans to build a network security business through acquisitions, after raising GBP6.5 million and selling its financial markets division. "We've identified Corero as a vehicle for a buy and build strategy," said Andrew Miller, who has been appointed executive director responsible for finance, operations and M&A. Corero raised the new capital through a GBP2.0 million placing and subscription of GBP4.5 million, and sold its financial markets division to Rivington Street Holdings PLC (RIVP.PM). The consideration for the sale is the assumption by Rivington of GBP2 million of Corero's convertible unsecured redeemable loan stock. The remainder of the loan stock will be converted into ordinary shares, leaving the company debt free. Miller said Corero will target network security due to significant market fragmentation, and the growth opportunities provided by a recent "huge increase in cybercrime". The company will aim to buy businesses with revenue in the range of GBP5 million to GBP10 million, initially focusing on Europe. Corero's targets are companies with established security technology that haven't been able to "break through" because of a lack of marketing expertise, Miller added. Tuesday's fundraising is mainly for working capital purposes, so further shares are likely to be issued to fund prospective acquisitions, he said. Following the fundraising, Jens Montanana, Chief Executive Officer of Datatec Ltd. (DTC.JO) will hold 32% of the enlarged share capital. Montanana, who will become a non-executive director, will own 56% of Corero together with his associates, the company said. The company will continue to invest in its remaining business systems division, which is profitable with annual revenue just under GBP3 million, Miller said. Shares at 1200 GMT down 7 pence, or 20.6%, at 27 pence in a slightly higher Alternative Investment Market--up 0.07%. -By Tommy Stubbington, Dow Jones Newswires; 44-20-7842-9268; [email protected] (END) Dow Jones Newswires July 14, 2010 08:03 ET (12:03 GMT)