Alternative Networks buys Intercept IT

First major channel acquisition of 2014 sees hosted desktop specialist Intercept IT absorbed into business comms services provider Alternative Networks in a £12.95m deal

Hosted desktop and virtualisation services provider Intercept IT has been acquired by business communications services provider Alternative Networks in a £12.95m all-cash deal.

City of London-based Intercept IT counts retailer John Lewis and property firm Savills among its clients, and is a Citrix, Microsoft and VMware partner.

It made sales of £9.8m in the year to 31 May 2013, and an EBITDA loss of £100,000. In the past six months it has conducted a major strategic review, trimming its cost base and one-off sales in lower margin hardware and software revenues.

As a result it now claims to do 50% of its business through recurring managed services, and made sales of £4m in the first half of its fiscal 2014 to 30 November, with £m worth of contracted but as yet unrecognised revenues in the pipeline.

Alternative Networks, which provides mobile, systems, networks, IT and billing solutions from vendors such as Avaya, Juniper, Mitel, O2 and Vodafone, said it wanted to offer a more complete cloud solution to its customers on a pre-established platform, and broaden its managed services reach to include enterprise virtualisation.

It said it saw complementary customer bases in similar verticals, and was also attracted by Intercept IT’s low capital investment requirement, spending just £200,000 in 2013.

It plans to move Intercept’s IT infrastructure into its own datacentres, with some cost synergies expected from the acquisition, which is expected to be earnings enhancing within 12 months.

Following the closure of the deal, Intercept’s co-founders Gary Collins and Ian Readman have resigned their board positions, although Collins will continue to support the combined entity as a consultant.

Alternative chief exec Edward Spurrier said the buy fitted with his acquisition strategy to pick up earnings enhancing companies that augmented its product and services offering.

“Intercept has an exceptional pedigree in virtualising IT infrastructures, having virtualised over 5,000 servers and more than 2,000 different applications in 30 languages, realising millions of pounds worth of savings to their [sic] customers,” he said.

“In anticipation of a sale, the founders developed a young and energetic management team who are well placed to take Intercept to the next level, supported by Alternative,” he continued.

“We are delighted to have completed this acquisition against considerable interest from other parties. The acquisition of Intercept will provide a further stimulus to organic growth across the Group as it presents good cross-sell opportunities into our respective customer bases.”

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