Alternative Networks swallows Control Circle for £39.4m
Hang on... EBITDA of cloudy biz was only £1.8m
AIM-listed biz comms provider Alternative Networks has dug deep for the second time this month and found £39.4m worth of loose change to buy managed hosting and cloudy player Control Circle.
This equates to nearly 22 times the £1.8m EBITDA that Control Circle made in the year to 30 September 2013, according to Companies House. In that same year, sales came in at £21.1m, up one per cent year-on-year.
The cash deal was funded by joint bank facilities of £43m from Barclays and Lloyds, Alternative has revealed.
Control Circle flogs hybrid cloud infrastructure services, dedicated and private virtual fluffy services, network and security, apps, biz continuity, and data centre and hosting services to enterprise punters.
The rationale, said Alternative CEO Edward Spurrier, is to mix those services with recently acquired Intercept IT, provider of hosted desktop to SMEs and desktop and server virtualisation services to large business, along with its own networking and data centre operation.
Existing management at Control will retain control of the business, but chief beancounter and co-founder Simon Hancock will exit "after a short transition period".
Control's CEO and co-founder Carman Carey stays on, and plans to concentrate on "cross-selling opportunities" to the the largest customers.
This is the second deal that Alternative announced this month, after splashing £12.95m on Intercept IT, which made an EBITDA loss of £100k in the year to 31 May 2013.
In channel acquisitions, the multiples paid by the buyer tends to be six to eight times EBITDA, so Alternative could be described as generous, despite the annuity-based numbers posted by Control.
Alternative needs to beef up its top-lines numbers after sales in the last calendar year came in flat at £114m, and pre-tax profit slid to £12.4m from £12.6m in the previous year. ®