SpiriTel Acquired by Daisy for £33m

A successful track record of acquisitions and organic growth has led communications provider SpiriTel to a position where yesterday they sold their SpiriTel Business operation to Daisy for £33.4 million.

SpiriTel CEO Alastair Mills had taken what was in effect a start up business in 2007 to become a successful national provider of converged voice, data and mobile communications with significant major account wins under their belt in a very short time.

The figure of £33.4 million includes the repayment of £6.1m debt facilities from Clydesdale Bank who have funded SpiriTel’s buy and build strategy since 2007.

Under a management team put in place by Penta in 2006 and led by CEO Alastair Mills, SpiriTel has established itself as one of the country.s leading providers of business communications products and services. As part of a turnaround strategy, SpiriTel Business, the Company’s main trading unit, was set up in 2007 and, via 12 acquisitions and a recently reported 15% organic growth rate, has grown into a £30m+ turnover business. At the point of sale, SpiriTel had almost 200 staff working from offices in London, Cardiff, Wigan and Glasgow.

Today, SpiriTel has over 4,000 corporate customers including RBS, Barclays, BBC Worldwide, Marriott, HMV, and City of London. In August of this year, the Company won its largest contract to date, a three year, £5m million deal with Punch Taverns to deliver one of the UK.s largest integrated voice and data solutions across 800 sites. In 2009, Alastair Mills was named National Comms Business Entrepreneur of the Year and was amongst the 2010 Global Telecoms “40 under 40” list for his work at SpiriTel.

The acquisition marks a successful exit for Penta Capital, the majority owner of SpiriTel, who originally invested in 2003 but more recently led a £10m fundraising in November 2009. The sale crystallises a substantial profit for the private equity group. As part of the transaction, after a short handover period, CEO Alastair Mills and CFO Ronnie Smith will be leaving the business, to focus on other business ventures.

SpiriTel were advised on the transaction by Hammonds LLP, finnCap Ltd and Knight Corporate Finance Ltd.

Commenting on the acquisition, Alastair Mills, Chief Executive of SpiriTel said: “It has been a real privilege to lead SpiriTel through a period of transformation and establish the Company as one of the fastest growing providers of integration communications to UK business customers. SpiriTel’s highly talented management team has executed a comprehensive turnaround strategy to the point where we have now sold a business of genuine scale that competes for and wins major contracts from major businesses. I have thoroughly enjoyed working with Penta Capital and the PLC board and I would like to thank them for their support during this exciting and rewarding journey.”

Commenting on the Offer, Matthew Riley, Chief Executive Officer of Daisy Group Plc, said:

“This is the largest acquisition the Company has made since coming to market last year. The Board believes that this acquisition gives Daisy Group a strong foothold in the mid-market, strengthening our sales team and engineering force, while significantly enhancing both our product portfolio and customer base.

“With our data hosting capabilities from the former Vialtus business, this deal gives us a great cross-sale opportunity to sell hosted solutions and fill our three data centres in London, Manchester and Fareham. In addition the business’ position as a Mitel Premier Partner, coupled with a nationwide engineering force will see enhancements to the Group’s systems and maintenance division.

“Over the last 18 months, Daisy Group has acquired and integrated 10 businesses. The Board believes the experience of those acquisitions should enable an efficient integration of SpiriTel into the Daisy Group platform.”

Steven Scott, Partner at Penta Capital added: “The sale to Daisy marks another successful exit for our investors. This was a difficult investment in the early years, which the current management team completely transformed, with our support, into a dynamic growth capital buy and build group in a rapidly consolidating sector. Twelve acquisitions were integrated quickly and efficiently on a relatively ungeared basis and, despite the economic uncertainty, the team successfully delivered organic growth alongside the acquisitions. I am sure that the SpiriTel team and customers will prove an excellent addition for Daisy Group and we wish them all well. We would like in particular to thank the board of SpiriTel for their hard work and focus over a prolonged period, delivering value in a difficult economic climate. We have very much enjoyed working with them and have appreciated their patience and long-term approach to shareholder value.”

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