iomart Group plc, the cloud computing company, is pleased to announce the acquisition of the entire issued share capital of Melbourne for a maximum cash consideration of up to £7.0 million.
Melbourne is a Manchester based provider of managed hosting solutions to over 600 customers. Melbourne operates its own datacentres in Manchester, providing iomart with additional datacentre capacity. As well as the addition of spare capacity, this fills a geographical gap in the iomart datacentre estate and provides a sales platform to address the North of England market.
Melbourne’s turnover in the year to 31 December 2011 was £2.9 million with an EBITDA of £0.63 million and net assets of £0.26 million. At completion, Melbourne is expected to have a net debt position of £0.17 million. Melbourne has delivered strong revenue growth, with December 2011 turnover around £0.9 million higher than December 2010 before adjusting for associated company trading. The acquisition is expected to be immediately earnings enhancing before acquisition costs and normal acquisition adjustments, including any fair value adjustments and the amortisation of intangible assets.
Of the total consideration of £7.0 million, £6.5 million has been paid at completion, with two deferred amounts of £0.25 million due; one contingent on the successful integration of the operations of Melbourne into the Group; and the other contingent on the amount of net debt and working capital of Melbourne at completion. The acquisition will be financed jointly from the Company’s cash resources and through a drawdown of £5.0 million from the Company’s bank loan facility.
In addition the Company has recently acquired a small web hosting business called Skymarket Limited, for a maximum consideration of £1.24 million on a debt free, cash free and fully funded working capital basis. In the year to December 2011 Skymarket Limited had revenues of £1.0 million.
Angus MacSween, Chief Executive stated:
“We are delighted to complement our continued organic growth by acquiring profit enhancing businesses. iomart has been looking for some time to acquire a quality managed hosting operation in the North of England to extend our UK coverage and Melbourne fits the bill perfectly, adding a strong customer list and additional datacentre capacity. We are also pleased to have welcomed Skymarket into the Group last month.”