TMT Blog – November 2009

Date

The second half of 2009 kicked off with a flurry of activity from newly listed consolidator Daisy Group as it stamped its authority on the telecoms reseller market.

Chief Executive Matt Riley reversed into a listed shell, picked up competitors Eurotel, AT Communications as well as part of Redstone, and all within the space of about six weeks. Since then the business has, sensibly, focused on integrating what it has picked up, giving some of the other players in the market a chance to get a piece of the action.

This month we’ve seen Alternative Networks announce its first acquisition for a couple of years, Spiritel pick up a couple of smaller competitors as well as Carphone Warehouse’s reseller business, Opal, announce the acquisition of UK Telco for an undisclosed price. Another big Daisy Rival, Chess, also announced a small acquisition a few weeks ago, picking up Bradford-based Xtel Communications, amazingly this was Chess’ 35th acquisition in the last 5 years.

The business telecoms market has been characterised by consolidation for some time now, leading to the creation of several mid-market powerhouses and begging the question, what is the end game for this market? Analysts have long expected a mobile operator to swoop in at the point that any one of the targets reaches an appropriate scale to represent a market leading entry point into the fixed line business. With acquisition activity having stepped up a notch in 2009 there’s a good chance we will find out who has the stomach for that strategy as we head into 2010.

Deals completed in the UK

UK listed telecoms services provider Alternative Networks announced that it has acquired Aurora Kendrick James (AKJ), a provider of billing and customer service software. The deal is for a maximum of £5.5m, with £4.6m paid up front and the remainder dependent on performance over the next 12 months. The acquisition will allow for accelerated development of Alternative Networks’ customer service portal and a more rapid integration of future acquisitions. It also protects the company’s existing exclusive rights over the software.

CACI Ltd announced that it had acquired Monitor Media, a UK-based digital agency providing online applications, e-commerce websites and email marketing for an undisclosed consideration. The acquisition increases CACI’s position in the digital marketplace and allows the business to offer a multi-channel marketing solution combining both online and offline elements.

Expotel announced the acquisition of LateMeetings.com, the conference venue internet search website for an undisclosed consideration. The acquisition is integral to the development of the relaunched expotel.com online presence and is expected to provide Expotel with significant growth in the conferences and events market.

US-based healthcare services business UnitedHealth Group announced that it had acquired ScriptSwitch Ltd, a provider of healthcare software, from Livingbridge. Scriptswitch, which provides software designed to support GPs with patient safety information, drug switch recommendations, and dosage optimisation information has grown rapidly since the investment by Livingbridge in 2007. The business’ Chief Executive, Mark Washburn, was recently voted BVCA ‘Venture Capital Backed CEO of the Year’.

Allocate Software plc announced it had agreed to acquire Time Care AB, a Sweden-based workforce management software developer, with a focus on the healthcare market for a consideration of £8.8m. The acquisition gives Allocate Software entry into the Nordic region, as well as expanding on its own expertise in the healthcare market.

Spiritel plc announced it had acquired Edge Solutions Ltd, a telecoms company offering fixed line and mobile voice, data and network solutions. The initial cash consideration was £3.6m with up to a further £5.7m payable on the business achieving certain performance targets. The acquisition was funded by Spiritel’s largest shareholder, Penta Capital, and increases Spiritel’s customer base to around 2,500 businesses.

US games publisher Electronic Arts announced it had acquired Playfish Ltd, a UK-based social network games developer and publisher. The cash consideration is approximately £168m with a further cash earn-out payment of up to £61m to be paid based on the acquired business achieving performance targets. The acquisition accelerates EA’s position in social entertainment and strengthens its focus on the transition to digital and social gaming.

Swiss Post Solutions Ltd announced it has agreed to acquire Microgen plc’s Billing Services Division (BSD). BSD provides managed services to process, store and distribute billing and related documentation via electronic and print media. The cash consideration for the deal is £7.5 million and the acquisition, which involves buying complementary technologies and services, allows Swiss Post Solutions to offer its clients real-time visibility of financial documents in an auditable process and gives them the option of switching from printed documentation to an electronic solution.