AIM-listed Maintel has snapped up Burnley-based Azzurri Communications for £48.5m. The deal gives Maintel greater scope in the cloud and UC space and strengthens its market position across both the private and public sectors.
Eddie Buxton, CEO at Maintel, said: "Azzurri Communications is a respected business with a complementary product offering and target market which will provide enhanced scale and visibility for the combined group.
"This acquisition will accelerate Maintel's shift into hosted cloud and data, ensuring we are well positioned to take advantage of these high growth areas of the unified communications market.
"It will also build scale in managed services, continuing the shift in our business mix, which we have been driving following previous acquisitions."
The enlarged group will provide a broad suite of solutions and services including a network services division, a mobile division, managed services and technology and professional services.
Azzurri CEO Chris Jagusz said: "Joining Maintel enables the combined business to offer its customers a broader range of services. Our employees will benefit too by being part of one of the most significant players in our market".
Earlier today Maintel announced revenues for 2015 of £50.6m, rising from £41.9m in 2014.
Philip Carse, Principal Analyst at Megabuyte, commented: "Maintel is buying Azzurri for £48.5m – 12x current EBITDA, in the process almost trebling its revenue base and unlocking significant synergies.
"Azzurri has had a chequered history as a buy and build that went awry, going through two balance sheet recapitalisations since 2011, resulting in the company being owned by six banks.
"Under newish CEO Chris Jagusz, the company seems to have finally stopped the rot after much focus on the 4Ps: Product development (especially in Cloud); improved Project delivery to time and budget; Process improvements; and more cost effective Procurement.
"In the year to June 2015, EBITDA grew 18% to £5.9m on revenues down 3.1% at £101m, the first such growth for five years.
"The main risk, of course, is the integration challenge, given that Azzurri is almost double Maintel’s size in revenue (£92m v £51m) and headcount (500 v 270) terms, and the business is still going backwards in profit terms.
"Time will tell, but if the integration is achieved successfully, this will truly mark a transformative deal for Maintel, taking it to close to Alternative Networks revenues (though smaller in EBITDA terms). The company will be over 4x bigger than in 2013."