Dublin and London-listed Irish software company Norkom is to purchase its US competitor Digital Harbor in an all-cash deal which could be worth up to $36.5 million (€26.65 million).

Although Norkom's chief operations officer, Cecil Hayes, said the acquisition would be financed "from internal resources", Goodbody Stockbrokers yesterday placed 8,140,000 ordinary shares of the company in the market. At a price of €1.90 per share, the placing raised just under €15.5 million for Norkom.

"There's a demand for stock so we felt it was a good opportunity to go to the market," said Mr Hayes. "We've had a liquidity issue in the last year, and there has been no significant sales of shares despite the lock-in ending."

Norkom floated on London's Aim and Dublin's IEX markets in June 2006.

Digital Harbor had unaudited revenues of $7.0 million in the 12 months to the end of June.

Like Norkom it provides risk management and regulatory compliance software to financial services customers which accounts for 80 per cent of revenues.

It also sells to the public sector and Norkom said it will look at options in this area but its focus remains on financial services.

Digital Harbor employs 74 staff at offices in Virginia and Utah in the US and at a development centre in Bangalore, India.

Mr Hayes said nine of Digital Harbor's customers are "tier one" US financial institutions with a number of these ranking in the top 20 firms globally.

As a result of the acquisition, Mr Hayes said US revenues would account for about 40 per cent of group turnover this year.

Although he said he was "confident that Norkom can grow rapidly in the US" there are no plans for the company to relocate its headquarters there.

Digital Harbor also has distribution deals with technology giant IBM and payments software firm eFunds. Mr Hayes said both companies were "excited about the combination" and Norkom would seek to win new business on the back of the partnerships.

About $3.5 million of the total purchase price is contingent on Digital Harbor achieving certain performance criteria.

Norkom expects the acquisition to be earnings enhancing during its 2008 financial year which ends on March 31st, 2009.

When the deal closes Norkom will employ 280 people globally and will be focused on financial crime prevention and regulatory compliance.