Livingbridge-backed Metronet (UK) has acquired Internet infrastructure and hosting company M247 for £47.5m. The acquisition is the first step in a buy and build strategy that aims to build a disruptive platform in the connectivity space with 'last mile' control, speeding up communications to end users, and a transit network across Europe.
Mid-market PE firm Livingbridge invested in Metronet (UK) in June 2014 as part of a £45m secondary buyout of the firm.
Metronet (UK) currently employs 150 people across two sites in Manchester and works with over 2,500 businesses, generating turnover of £21.5m in the financial year to 2016.
Following the acquisition Metronet (UK) will be able to offer a combined portfolio of connectivity and content services including wireless network services, data centres and managed hosting solutions across the UK and Europe. The combined business will have three data centres, over 200 staff and EBITDA in excess of £12m.
Lee Perkins (pictured), Chief Executive at Metronet (UK), said: "M247 provides the scale and reach to build upon our existing momentum and the expertise and infrastructure to provide richer solutions to our combined customers."
M247 was founded in 2000 by school friends Jonathan Buckle and Chris Byrd, initially as a web hosting services business before David Buckle, Jonathan Buckle's father, decided to co-invest in the business to purchase a web hosting company called Open Hosting. Open Hosting was then incorporated into the existing business before being rebranded as M247 in 2003.
Matthew Caffrey, Partner at Livingbridge, added: "This is a fantastic step forward for Metronet (UK) as it continues to expand its footprint across the UK and eventually into Europe. This acquisition is the start of a journey to build an international, multi-offering Internet service provider and hosting business.
"Metronet (UK) has an exciting time ahead as it looks for similar acquisition opportunities."
According to Marcus Allchurch, Partner at Acuity Advisors, Metronet is currently one of the most exciting communications companies in Europe. "Metronet is well capitalised with a differentiated service offering and first class team of founders and new management," he said.
"As Acuity have consistently said, private equity backed buyers in this market are focusing on strategic acquisitions, and this is no exception.
"Metronet are significantly expanding its capabilities with M247’s infrastructure expertise.
"Accounts have not been released for the year ended April 2016, however Megabuyte suggested EBITDA of around £4m and growth to a potential £6m for the current year, all of which implies a run rate multiple of just under 10x EBITDA which is very much in line with the market for high quality targets.
"Expect more acquisitive and organic growth from Metronet and its private equity backer, Livingbridge."