The acquisition follows K3’s purchase of FDS’s Sage 200 business unit in December last year.

The Cardiff-based company will be integrated into K3’s existing Sage division.

Andy Makeham, CEO of K3, says the purchase of FDS will extend its current Sage product range.

He adds, ‘The deal also represents further progress in our strategy to acquire customer bases with strong recurring revenues, bringing over 300 customers where we see excellent opportunities to sell additional software services and solutions, including hosting.’

Further cash consideration of £400,00 will be payable following completion dependent on certain conditions being met and an earn-out of up to £1 million in cash may also be payable after 12 months, based on performance criteria, according to a statement.

FDS supplies accounting software Sage and e-commerce solutions to more than 300 customers in the UK and Ireland, including water supplier United Utilities Group, television shopping group Ideal Shopping Direct and Chubb, which provides security and fire safety solutions.

Established in 2001, K3 supplies, installs and supports Microsoft-based business planning and management software to retailers, manufacturers and distributors predominantly.