Manchester based digital communication Hasgrove has sold digital marketing arm Amaze to publisher St Ives, in a deal worth up to £25m.
The deal is part of a major step forward for St Ives in diversifying into digital.
St Ives specialises in books for publishers such as Penguin and corporate literature for brands such as HSBC and Sainsbury’s.
It has made several acquisitions in the marketing sector to reduce reliance on print.
Amaze will operate as a subsidiary of St Ives and continue to be managed from its current locations by the existing management team.
The deal comprises a £15.3m initial payment, which includes £1.8m repayment of intercompany debt, and up to a further £9.7m on condition of certain profit targets during 2013.
Hasgrove acquired a number of digital businesses between 2007 and 2009 and has since completed the integration and restructuring of these businesses.
This resulted in it owning two divisions: digital and communication services, which included Amaze, Interact and The Chase, and public affairs and strategic communications operating as Interel which was sold to a management team in July 2011.
In the year to 31 December 2012, Amaze, which was founded in 1997, achieved revenues of £17.3m and operating profits before management recharges of £1.7m. The net assets being disposed amount to £6.7m.
Following the sale of Amaze, Hasgrove will own three trading subsidiaries – Interact, The Chase and Landmarks.
Part of the net proceeds of disposal will be invested in the group’s remaining businesses and up to £1.9m will be used to repay fully its bank loans.
Group finance director Stephen Collins will step down from the board of Hasgrove and his role as company secretary following the completion of the transaction. He will remain with Amaze as finance director.