Acquisition of Comunica Holdings Limited
Coms plc has announced that it has conditionally agreed to acquire from Redstone plc its subsidiary Comunica Holdings Limited and its wholly owned subsidiaries Comunica Group Limited and Redstone Converged Solutions Limited (together "Redstone") (the "Transaction"), a significant player in the UK Information Technology and Communications sector.
Redstone is a leader in infrastructure, smart buildings and support services with a strong financial services client base. Founded in 1995, Redstone has a strong recognisable brand and has grown to an over £30 million annual revenue base with 300 staff. In the year ended 31 March 2013, Redstone reported turnover of £30.8 million and EBITDA of £2.5 million. Redstone has a list of blue chip clients and partners including Cisco, IBM and HP, and Coms has identified potential for growth in new markets and industries for the enlarged Coms Group.
The total consideration of £9.5 million will be satisfied as follows:
-initial consideration of £7.65 million coming from Coms cash resources and a new £2.5 million overdraft facility secured against the Redstone order book; and
-a further cash deferred consideration of £1.85 million which will be paid on the anniversary of the date of signature of the Sale and Purchase Agreement.
The Transaction constitutes a fundamental change of business for Redstone plc and therefore, pursuant to the AIM Rules for Companies, Redstone plc is required to seek its shareholders' approval for the Transaction by way of an ordinary resolution at a general meeting to be held on 21 November 2013. Redstone plc has received irrevocable commitments from shareholders representing 46.5% of its ordinary share capital to vote in favour of the resolution to approve the transaction at its general meeting. There are no other conditions attached to the Transaction.
Dave Breith, Coms CEO, states:
"This acquisition is earnings enhancing and provides us with the scale we need to further build the Coms group of companies. It provides us with a significant increase in income generation to fund the enlarged business and also establishes a sound infrastructure, which allows the Coms group to provide an integrated service for our customers from "telecoms connectivity through to telecoms solutions". Whilst Redstone will operate as a subsidiary of Coms plc we have identified significant commercial synergies and cost savings that can be achieved by bringing these two businesses together under the Coms umbrella. As a result we will achieve a significant uplift in gross profit, access to European markets currently served by Redstone and a significant 'value add' to customers of both businesses. This acquisition fundamentally changes the dynamics of our business and positions us for the next phase of growth."