LONDON, UK: Croma Security Solutions Group plc (AIM: CSSG) has reached a conditional agreement to sell its subsidiary, Vigilant Security (Scotland) Limited (“Vigilant”), to M&W Security Limited for a total consideration of £6.5 million.

The sale aligns with Croma’s strategic focus on its higher-margin businesses, Croma Locksmiths and Croma Security Systems. The proceeds from the transaction will support the nationwide expansion of the company’s retail chain of modern security centers.

The acquiring party, M&W Security Limited, is owned and operated by Sebastian Morley and Paul Williamson, former directors of Croma Security Solutions Group. Both Morley and Williamson resigned from the board in December 2022 to prepare a bid for Vigilant. The purchase will allow them to acquire the business they previously worked for and continue its development.

The £6.5 million consideration represents approximately 91.8% of Croma Security Solutions Group’s market capitalization, which stood at £7.1 million as of June 2, 2023. In the financial year ended June 2022, Vigilant accounted for approximately 42% of the Croma Group’s EBITDA, and for the six months ended December 2022, it contributed approximately 29% of the group’s EBITDA.

The sale is subject to shareholder approval and is expected to be completed on June 30, 2023. Roberto Fiorentino, CEO of CSSG, expressed delight in the proposed sale, noting that Vigilant is a good business but no longer aligns with the future direction of the group. He emphasized that the funds generated from the sale will accelerate the growth of Croma’s Locks and Systems business, particularly through the expansion of their modern Security Centers. Fiorentino also mentioned that the overall trading performance of the group has been strong, with results expected to surpass the previous year.

The transaction will be structured as follows: £1,073,314 will be paid in cash upon completion, £4,126,686 will be issued as Loan Notes, and an additional £1,300,000 may be paid in cash or through the issuance of a Redeemable Share, at the buyer’s discretion. The inter-company balances of £1,067,913 owed by Vigilant to Croma will be settled upon completion. The company will receive either £2,141,227 or £3,441,227 in aggregate cash, depending on whether the Redeemable Share is issued.

Due to Vigilant’s relative size within the Croma Group, the sale is subject to approval by shareholders at a general meeting of the company. Compliance with the AIM Rules requires this approval. The completion of the sale is contingent upon various conditions, including the shareholder approval at the General Meeting.

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