BUSINESS
Redstone buys Xpert for STG25.5m
04-04-2005
by
Xpert Group, a firm founded in Ireland, has been acquired by UK-based communications services provider Redstone for STG25.5 million.
The buyout, announced over the weekend, comes on the back of an excellent year for Xpert Group, which was founded in Ireland over 20 years ago under the name Reflex. In the year to 30 April 2004, the company posted revenues of STG27.4 million. The firm also says that pre-tax profits were up 360 percent during the 2004 fiscal year and claims that in the nine-month period ended 31 January, it achieved year-on-year order revenue growth of 15 percent.
Xpert Group was founded in 1984 by Aidan Farrell, and following a re-organisation and re-branding in 1994, the firm expanded into the UK and made several acquisitions, including the purchases of Castletron, Gandalf and Genesis. In 2001, a STG12 million management buyout underwritten by Lloyds Development Capital saw the firm move its headquarters to London. Now, the company consists of two divisions, UK-based Xpert Communications and Ireland Xpert Technology.
In announcing the buyout, Redstone and Xpert made no mention of potential job cuts but did say that the deal would result in some STG1 million in annualised cost savings. Though most of Xpert's work is carried out in the UK, about a quarter of its revenues come from its Irish business.
The idea behind the merger is to create a kind of "one stop shop" for communications services in the UK and Ireland, Redstone said, announcing the cash and shares deal. Already, Redstone is a well-known name in the IT and telecoms services business, but the addition of Xpert Communications should help Redstone to increase its foothold. Combined, the new firm will employ about 500 people in ten locations throughout the UK and Ireland.
"The directors believe that the combination of Xpert and Redstone will give the enlarged group critical mass in its systems communications solutions business by becoming one of the top integration partners for Cisco within the UK and one of the top three integration partners for Avaya in the UK," Redstone said.
"Other partnership opportunities include strengthening the enlarged group's relationship with BT Group, and developing Xpert's existing relationship with Mitel. Xpert also provides Redstone with the opportunity to expand into the Irish market via Xpert's existing Irish operation and exporting their historical HP enterprise server skills into the UK marketplace," the company added.
Technically, the deal has been classified as a reverse takeover, which means that Redstone shareholders will need to approve the transaction. Redstone said that it expects to see Xpert fully integrated into the group within three months of the merger closing.
"This is a transformational deal and a significant milestone in Redstone's aspiration to secure a leadership position within the communications marketplace, and be an active participant in the consolidation of the communication services industry," commented Ian Brown, CEO of Redstone. "The operational and geographic fit of Xpert and Redstone makes perfect commercial sense."
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