29th Apr 2014 11:39
LONDON (Alliance News) - Renew Holdings PLC Tuesday said it will buy telecoms infrastructure engineering company Clarke Telecom Ltd for GBP17 million, a deal that will boost its earnings and comes at a time when the UK's major telecoms companies are ploughing money into upgraded infrastructure to handle 4G services and upgrade existing services.
The AIM-listed engineering services company said it has already paid GBP11.9 million of the purchase price and will pay the remaining GBP5.1 million at the end of May for some of the shares held by Clarke's management team. Renew said it has funded the deal from its cash resources plus a four-year term loan of GBP12 million from HSBC Bank.
Clarke, which was founded in 2000, is based in Oldham but operates across the UK, employing about 200 staff. It reported revenue of GBP32.9 million and operating profit of GBP3.5 million, or GBP2.3 million on a normalised basis, in the year to October 31, 2013. Renew said it expects revenue to grow about 5% in Clarke's current financial year and for the normalised profit margin to be maintained.
Renew will buy one third of the equity held by Clarke's management team of five people at the end of May. All of the management team will stay with the business and have signed new 12 month service contracts which can't be terminated within the first two years, Renew said.
"This earnings enhancing acquisition accords with the group's clear strategy of growing its engineering services business, where it can secure strong framework positions with major clients in sustainable markets supporting critical UK infrastructure," Renew Chairman Roy Harrison said in a statement. "Clarke Telecom is a leader in a field which is enjoying strong structural growth and broadens Renew's activities in the Infrastructure market."
Renew Holdings shares were up 6.9% at 230.90 pence Tuesday.
By Steve McGrath; [email protected]; @stevemcgrath1
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