Wilkinson sells InTechnology in £65m deal

ENTREPRENEUR Peter Wilkinson has sold his InTechnology Managed Services business for £65m.

The Harrogate-based firm has been acquired by AIM-listed IT group Redcentric in a deal which will create one of the largest independent managed services businesses in the UK.

Mr Wilkinson is well known for his success developing and selling Planet Online, the business internet service provider, the first consumer ISP, Freeserve, and online football and betting service Sports Internet which he sold to Rupert Murdoch’s Sky for £300m in 1999.

Redcentric’s acquistion of InTechnology, which had pre-tax profits of £3.2m on revenue of £41m in the year to the end of March 2013, will double its revenues and create a business with more than 2,000 customers, four major data centres and increase recurring revenues to more than 80%.

The enlarged business will have its headquarters in Harrogate with operations in London, Cambridge and Reading.

A team of lawyers at Walker Morris in Leeds led by Debbie Jackson, Graham Mackenzie and Oliver Duke advised InTechnology on the deal.

InTechnology, which employs 190 staff across three locations, was founded in 2000 from the combination of Mr Wilkinson’s Storm and VData firms to create a business enabling online data backup.

The business grew both organically and through acquisitions to build a managed network, data, hosting and voice telephony business helping customers move their IT operations to cloud-based managed services. In the last two years 94% of its revenue is from recurring revenue.

Because of the size of the deal, Redcentric’s acquisition of InTechnology is classed as a reverse takeover by AIM.

Peter Wilkinson, CEO of InTechnology, said: “I have felt for some time that InTechnology Managed Services needed to become a much bigger force in the UK market. This transaction instantly achieves that aim, the two companies combined creates a major force in the market which provides an unrivalled range of quality products and services to its large expanded customer base.

“I am very proud of the business we have built and would like to thank customers and staff alike for their support, which has contributed to its success, and look forward to an exciting future.”

Debbie Jackson, corporate partner at Walker Morris said: “The sale represents a great fit for both companies and is a positive one for the region, with the enlarged group being headquartered in Harrogate. The deal reinforces Walker Morris’ expertise in advising on large scale IT transactions. Having recently advised Servelec Group plc on its proposed IPO on the main market of the London Stock Exchange, it is also further demonstration of the increasing activity in capital market transactions.”

Redcentric was demerged from the Redstone Group in April 2013 in order to maximise its potential as a leading mid-market network-based managed services provider.

The first published results of Redcentric since the demerger, for the six months trading to September 30, will be announced in mid December, when it will report revenue of around £21m and adjusted EBITDA of £3.5m and net debt of £12.3m.

The anticipated pro forma net debt of the Enlarged Group post Completion is expected to be approximately £17.1 million.

Redcentric is funding the acquistion through a share placing of 80m shares of 80p to raise £64m with the remained financed through an increase in its existing banking facilities.

It said the share placing was heavily oversubscribed with several blue chip institutions added to its share register.

Tony Weaver, CEO of Redcentric said: “This transformational acquisition will help the company to achieve its aim of becoming the leading independent managed services business in the UK. Redcentric will become a go to provider in the mid market for end-to-end managed services as we will be one of very few providers with high quality data centre assets connected by a national data network with a significant cloud platform and a broad suite of technical support skills.

“I am excited about the opportunities that exist and would like to thank both existing and new shareholders for their overwhelming support of the transaction.”

MXC Capital Advisory acted for Redcentric and Oakley Capital Corporate Finance advised InTechnology.