AdEPT raises £7.3m to acquire Atomwide

Unified communications and managed IT services provider AdEPT Telecom announced on Wednesday that it has signed a £7.3m convertible loan instrument with Business Growth Fund, and also agreed to acquire the entire issued share capital of UK-based specialist education sector IT provider Atomwide.

The AIM-traded firm said the proceeds from the convertible loan instrument, plus £4.7m of the existing bank facility, would be used by the company to fund the acquisition.

It said the loan instrument was convertible into ordinary 10p shares in the company at a price of £3.93.

“Following their initial equity investment in AdEPT during 2016 we are delighted to have obtained further support from the team at BGF to work alongside our existing debt providers, Barclays and The Royal Bank of Scotland, and provide funding for the acquisition of Atomwide,” said AdEPT chairman Roger Wilson.

“This gives us the market leading position in IT for education in London.”

With regards to the Atomwide acquisition, the AdEPT board said initial consideration totalled £12m plus surplus cash of Atomwide at 31 July.

The transaction was expected to be earnings enhancing from completion, with the board adding that AdEPT’s group revenue run rate was anticipated to increase by approximately 19%.

Atomwide was already in a long-term relationship with AdEPT, as a “key technology partner” for the ‘London Grid for Learning’.

Its customers included more than 4,000 schools with over two million users.

AdEPT said Atomwide provided a “highly complementary product set” for telecommunication and IT convergence, and it also owned the intellectual property rights for their education applications which were hosted on-site at its data centre in Orpington.

The existing “highly experienced” senior management team would remain with Atomwide.

“We are delighted to have acquired such a high quality, well-run and profitable business with a strong management team,” said AdEPT chief executive Ian Fishwick.

“Atomwide is an excellent fit because it gives us a strong market position in IT for education, particularly in London.”

Fishwick said it complemented AdEPT’s acquisition of OurIT in February, which was focused on London and South East commercial customers.

“After the Atomwide acquisition approximately two thirds of AdEPT revenue will be generated from managed services.

“The acquisition is expected to be earnings enhancing from completion.”