Under the terms of the acquisition, SpiriTel has agreed to pay £0.8 million in cash on completion with £0.5 million of deferred payments payable over a two year period. Performance-related earn-out payments of up to £1.7 million are also payable by September 2009 with the maximum consideration payable being £3.0 million. The acquisition is to be funded by an extension to SpiriTel’s debt facility with Clydesdale Bank. In the year ending 31 December 2007, ED reported revenues of £2.1 million, EBITDA of £0.29 million and has tax losses of approximately £5 million.
ED provides a range of network services to over 700 corporate customers. ED’s services include: inbound and outbound calls, non geographic numbers, wholesale line rental and broadband.
The purchase of ED is SpiriTel's sixth acquisition in less than two years. SpiriTel intends to swiftly integrate ED into its rapidly expanding Business Division with the addition of minimal incremental overheads. The acquisition is expected to be immediately earnings enhancing. ED will be rebranded within SpiriTel’s Business Division and will afford SpiriTel an opportunity to cross sell the Company’s extended product portfolio, which includes mobile voice and data, networking and hosted VoIP and WiFi services, into the ED client portfolio.
Commenting on the acquisition, Alastair Mills, Chief Executive of SpiriTel said: "The ED transaction is another exciting step in our acquisition-led growth strategy. Following a sustained period of organic and acquisition-enhanced growth, SpiriTel has now attained a level of scale that allows us to bolt on acquired companies and swiftly deliver the resulting synergy benefits of cost savings and new sales opportunities. SpiriTel has an excellent track record in effective acquisition integration and we are confident that ED will prove a highly profitable addition to our Business Division.
He added: “In a rapidly consolidating sector, we will continue to pursue this strategy of making selective, earnings enhancing acquisitions that add scale to our operations, expand our customer base and furnish us with the opportunity of organic growth driven by cross selling.”
Arthur Wingrove, Chief Executive of ED said: “This is a particularly exciting partnership for ED’s customers. SpiriTel is recognised as a leading provider of converged communications to businesses throughout the UK and our customers will benefit from the opportunity to buy an integrated voice and data product set from a highly respected and rapidly growing B2B specialist.”