Horizon Technology has broadened its business focus with the €10 million (£7.9 million) acquisition of the profitable Dublin-based Internet agency, Webfactory.

The cash and share earn-out deal means that Horizon will now be able to offer customers front-end Internet services such as website design, development and consultancy, in addition to its back-end or technical systems services.

The deal, which is on a revenue multiple of 3.2 times and an earnings multiple of about 29 times, could be followed by the acquisition of similar web operations in the UK as Horizon refocuses on web-centred business processes and a full Internet service.

Horizon is making an up-front cash payment of €3.7 million to Webfactory's owners - founder Mr Simon Walsh and directors Mr John O'Shea, Mr Ronan Mac Ruairi and Mr Marcus Lynam - and its 34 employees.

The €6.3 million balance will be paid in Horizon shares over a three-year period, subject to Webfactory meeting agreed targets.

All Webfactory employees will benefit from the sale. Staff are to share 8 per cent of the total acquisition price, which will mean payments equivalent to between 40 per cent and 70 per cent of salary, according to a spokeswoman.

Webfactory was set up in 1995 and is a full-service Internet agency. It offers its corporate customers everything they need to do business on the Internet, from site design to web-enabling of old legacy systems. The company is profitable and has a strong management team. Webfactory will become a wholly owned subsidiary of the Horizon group and all employees will remain in place.

Describing Webfactory as "the most successful full-service Internet agency in Ireland", Horizon chief executive Mr Samir Naji said the acquisition would significantly broaden the group's Internet service offerings. Webfactory managing director Mr John O'Shea said the acquisition would give Webfactory access to an international audience.