Daisy acquires Nottingham network installer for £6.3m

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Matthew Riley, chief executive, Daisy Group

2:24 pm, February 9, 2010
Daisy acquires Nottingham network installer for £6.3m

Nelson-based telecoms firm Daisy Group (AIM: DAY) has acquired Nottingham-based data networks installer Managed Communications for £6.3m, payable in cash.

Around £4.65m will be paid on completion of the deal, with the remaining £1.66m potentially being adjusted either upwards or downwards depending on the level of earnings that Managed Communications achieves once its accounts are completed in six months' time. A further earn out element is payable depending on its financial performance in the year to July 31, 2011.

Managed Communications provides data networks through bonded ADSL and SDSL lines to around 800 SME customers. It also sells internet access, VPN, managed security, email and managed bandwidth solutions through its www.managedcomms.co.uk site and VPN services through its www.vpn.co.uk site.

Daisy said that bonded DSL lines provided a “lower cost alternative” to leased lines and were therefore a more popular choice for smaller firms, even though installers make higher margins on them. In the year to December 31, 2009, the firm's unaudited accounts showed earnings before interesrt, tax, depreciation and amortisation of £1.6m on revenues of £3.8m. The firm is also expected to have cash reserves of £1.1m on completion.

"Strategically this is the right acquisition for us as we move forward into a data-rich and more converged world,” said Daisy Communications' chief executive officer Matthew Riley. “The combination of Managed Communications and their product offering, with Daisy's sales force and SME customer base, creates cross-selling potential and the opportunity for margin improvement.”

The firm was advised on the deal by law firm Eversheds.

"Having worked closely with Daisy on four acquisitions over the past six months, it's clear that the company has the capability and conviction to take advantage of current opportunities in the market,” said corporate partner Keith Froud.

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