£29m acquisition boosts Openreach rival
A communications infrastructure business has been bought by an ambitious stock market-listed group which wants to be the main rival of Openreach.
CityFibre has acquired Telford-based Entanet for £29m. It believes the company, with provides wholesale communications services, will extend CityFibre’s existing channels to market and it will be able to “realise synergies of over £3m per annum” within three years.
Last month CityFibre announced a £185m fundraising to support its growth, both through acquisition and by targeting the residential market with the construction of Fibre to the Home networks in up to 10 UK towns and cities.
Entanet, which employs 115 people and has annual revenues of £36m, underwent a £14m management buyout in 2014, which was supported by a £6m investment from Mobeus Equity Partners.
“Our partners will soon be able to take a strong, compelling and highly competitive proposition to the market, reaping the rewards of CityFibre’s national full fibre infrastructure footprints and next generation products,” said Entanet chief executive Elsa Chen.
“Together, we are creating a new breed of wholesale service provider that will empower channel partners to change the connectivity market landscape.”
Entanet was advised by Birmingham-based Catalyst Corporate Finance, which delivered the deal in just three months from the initial approach.
Jamie Hope, a partner at Catalyst, said: “The deal is significant for the sector as a relatively unique example of vertical integration with CityFibre seeking to challenge Openreach’s dominance in full fibre network provision.
“The deal also supports the trend towards increasing levels of M&A activity in the UK fibre connectivity space, which we expect to continue over the medium term.”
The sale is the fifth transaction that Catalyst has advised on this year in the TMT sector, and follows Exclaimer’s £23m growth capital investment by Livingbridge and Bluefin’s £42m sale to Mindtree.
