Fonebak pays “up to £4.2m” for Intec

Fonebak plc has taken over Intec Group in a deal that could be worth a total of £4.2m. Fonebak is a leader in the recycling and repair of mobile handsets. This
takeover makes good sense for both sides – Fonebak adds resources, some specialisations, and the promise of a profit contribution more or less is also Intec’s main speciality, and the immediately: Intec fixes the problems caused by the loss of a big Vodafone contract last year and improves its offer to networks and manufacturers.

Intec will retain its identity and its management team under the new regime. Founder Harry Ramis continues as MD. Fonebak is paying £1.7m in cash immediately, with another £2.5m payable over the next two years if specified performance criteria are met.

Intec, which was founded in 1996, had sales of £15m and pretax profits of £660,000 last year. Fonebak is much larger; it floated on AIM in March 2005 and is due to announce its first results under the new rules later this month, but recently indicated that FY2005 would finish with sales of £37m (up from £27m a year ago).

Fonebak says it expects Intec to contribute to net profits in the current year.
Intec and Fonebak have actually been working closely together over the past year, notably in setting up an offshore phone repair facility in Romania. Intec will now be able to offer low-cost offshore services to clients who don’t need an instant turnaround on repair work.

The new company will have around 450 staff, including 155 at Intec. The takeover certainly suits Intec, which had reportedly been considering slimming down following Vodafone’s decision last year to go with a single repairer. The contract was reportedly worth £4m a year, and at the time many were surprised when Nottingham-based CRC won it over Intec, the pre-match favourite. Early this summer CRC was reportedly subcontracting some of the work to rivals, including Intec, to cope with the workloads.

Whatever the progress of that arrangement, the Fonebak takeover effectively means Intec can keep its team together and seek new business with the security of a large and successful step-parent behind it.

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