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Telecity in talks to acquires Data Electronics Group

One wannabe cloud biz chats up another

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Data centre provider TelecityGroup has confirmed it is chatting up Data Electronics Group (DEG) and that those flirtations could lead to an acquisition, reported to be valued at roughly £100m.

The discussions are at an early stage, but Telecity, which claims to be Europe's largest pusher of carrier-neutral data centres, is eyeing up cloud expansion and has the funding to buy and build.

"The Group confirms that it is in discussions with the shareholders of Data Electronics, which may or may not lead to an acquisition by TelecityGroup," the AIM-listed firm stated in a note to the market.

It added that the acquisition, if given the green light, would be funded out of the existing debt facilities held by the group.

Back in May, Telecity secured £100m of debt refinancing, taking its total credit facility to £300m, which it will use to "expand" the business in Europe.

For 2010, Telecity made an EBITDA of £83.4m, up 30 per cent on the same period 12 months earlier as sales grew 16 per cent to £196m. Pre-tax profits climbed more than 20 per cent to £45.9m.

Dublin-based DEG, which turned over €15.6m (£13.7m) in 2010, a rise of more than 10 per cent on the previous year, houses some 55 staff and serves customers including the Dublin Airport Authority.

Less than two months ago, it unveiled a virtual private cloud service, including physical infrastructure, hardware, licensing, operating systems, virtualisation, networking and data storage.

Cloud is often billed as the panacea for businesses looking to remove or severely cut back capital expenditure on IT, and Telecity is vying for a piece of this action.

The firms refused to comment further. ®

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