Inside information: WithSecure sells its Cyber security consulting business

Transaction Overview - WithSecure Corporation has signed a share purchase agreement to sell its cyber security consulting business to Neqst, a Swedish investment firm specializing in technology and technology-enabled companies [1] - The transaction involves the sale of shares of a to-be-established WithSecure cyber security consulting group, to which the consulting business will be transferred prior to completion [2] - Approximately 250 employees across Finland, UK, Sweden, Denmark, Singapore, Italy, and the US are expected to transfer to Neqst as part of the deal [2] Strategic Rationale - The divestment aligns with WithSecure's strategy updates first announced in October 2023 [3] - The cyber security consulting unit provides world-leading offensive security consultancy services [3] - Neqst views the acquisition as a valuable complement to its portfolio of leading IT services firms and plans to establish the business as a standalone entity for growth [4] Financial Terms - Total enterprise value of the transaction is EUR 22.5 million [5] - 60% of the purchase price (EUR 13.5 million) will be paid as fixed cash upon completion [5] - 40% of the purchase price (EUR 9 million) is variable and based on business performance in 2025 and 2026, payable in two installments in early 2026 and 2027 [5] Accounting Treatment - WithSecure will classify the cyber security consulting business as assets held for sale until closing and measure net assets at fair value [6] - Results of the divested business will be included in discontinued operations [6] - An impairment cost of approximately EUR 13 million is expected to be recorded in Q4 2024 as part of discontinued operations [6] Timeline and Next Steps - Transaction expected to complete during Q2 2025 [7] - Completion subject to customary closing conditions and regulatory approvals [7] - WithSecure will publish its Q4 2024 financial statement release on 12 February 2025 [7]