Adept acquires Datrix in £9m transaction

Managed IT services provider AdEPT announced the acquisition of Datrix on Wednesday, for initial cash of £9.0m, funded through its new bank facility.

The AIM-traded firm described Datrix as a “well-established” supplier of advanced cloud-based networking, communications, and cybersecurity solutions, based in London, with expertise in the growing ‘software-defined wide area networking’ (SD-WAN) market.

It said the “strategically important” acquisition was in line with its stated strategy to grow both organically and by acquisition, leveraging its banking facilities which were supported by a strong balance sheet and high cash generation, as well as to consolidate a “fragmented” market through complementary acquisitions with strong levels of recurring revenue and margin.

Following the acquisition, group run-rate revenue and adjusted EBITDA for the year ending 31 March 2022 was expected to increase by about 18% and 13%, respectively

Datrix unaudited reported revenue in the 12 months ended 31 January totalled £10.7m, generating adjusted EBITDA of £1.5m and profit before tax of £0.6m.

AdEPT said 63% of its revenue and gross margin were generated from recurring services for the year, adding that the acquisition was expected to be earnings enhancing in the current financial year.

Earn-out consideration of up to £7m would be payable in cash, based on the performance of Datrix in the 12 months ending 31 March 2022.

“This acquisition is a game-changer for AdEPT, taking us to the forefront of next generation networking delivery,” said chief executive officer Phil Race.

“The AdEPT group already has a strong presence in the networking and cyber security arena, as evidenced by the delivery of the mission critical Kent NHS network, the deployment of the secure Fortinet firewall across London schools, and through offerings on our AdEPT owned hybrid cloud platform, Nebula.”

Race said Datrix, with the products and partners it would bring, would build on AdEPT’s capabilities, adding scale and extending both its expertise and solution breadth.

“Datrix is a high-quality business with a well-established customer base, generating strong levels of recurring revenue and a cash generative, capex light, business model.”

At 1428 BST, shares in AdEPT Technology Group were up 10.15% at 277.58p.