Capita splashes £80m on network biz Updata
Greedy integrator snaps up public sector partner - as we predicted
Capita has coughed an eye-watering £80m in cash for fellow Public Services Network (PSN) provider Updata, as El Chan predicted months ago.
The pair are already well known to each other: they have an alliance in Scotland and linked arms on contracts including the recent Scottish WAN project valued at £325m over nine years.
As revealed in November, private equity backer LMS Capital and management at Updata put the feelers out among the channel and investment community to see if there were any takers. But Capita blew all its rivals out of the water with the £80m bid.
The Surrey-based firm employs 160 staff to design and build WANs for the public sector clients and pipe broadband to them. Customers include Kent, Essex and Hertfordshire County Councils and it is one of 12 suppliers accredited on PSN.
It has 250 exchanges serving more than 2,600 end sites and also sells managed infrastructure services and voice and data comms.
According to Companies House, Updata reported an operating profit of £3.7m in the year to 30 June 2013. The Capita price tag would represent a multiple of 14.2 times the £5.6m in operating profit Updata is forecast to report in fiscal '14 on sales of £41.8m.
Further forecasts by Capita show it expects Updata to make an operating profit of roughly £12m on revenues of £74m in the following fiscal to June 2015.
The strategic alliance between the firms began in 2011 when they teamed up on contracts for local authorities in West Dumbartonshire, North Ayrshire, Fife and East Lothian.
In a statement, Capita chief exec Andy Parker talked up Updata's reputation as a provider of networks to schools, councils and health bodies, saying: "Updata will strengthen our network capability".
The new buy will be folded into the IT Services division at Capita which recently welcomed another addition in security reseller Network Technology Solutions. ®