Tribal is to set to sell its health and government business to rivals Capita for £15.87m, it has been announced.
The consultancy said the proposed sale would allow it to focus on its education and training businesses.
Chair John Ormerod said the board had decided it did not have the “significant investment” needed to increase revenues in government and health and could use the cash raised by the sale to reduce its debts.
The sale, which needs to be approved by shareholders, will conclude more than six months of takeover talks with a number of interested parties.
Discussions with a US company failed to agree a sale last year but, since December, the company has been in talks with Capita.
At the same time, Tribal Group has been busy divesting itself of its support services businesses.
The company announced its intention to focus on its “core business” in health, education and government shortly after the company’s 2009 accounts showed a £45.6m pre-tax loss and growing debts.
Capita has been linked to Tribal during both rounds of takeover talks.
However, market analysts have questioned the wisdom of such a move.
Robin Speakman, analyst with Shore Capital, said a further acquisition by Capita – which bought education IT supplier Ramesys in 2010 – would give it growth at a time when it was predicting negative organic growth.
However, he said the government’s emphasis on increasing competition for public sector contracts and interest in smaller and non-private sector suppliers could count against a merged Tribal-Capita giant when contracts were awarded.
“We are fairly sceptical about some of the acquisitions activity by Capita,” he said.