Analysis: Who will fast-growing Daisy buy next?


Analysis: Who will fast-growing Daisy buy next?

Alex Scroxton

At the start of 2009, Daisy Communications was just another bit player in the pantheon of UK business comms providers, but recently its situation has changed considerably.

The firm has acquired many times in the past eight years, but given its recent form there is little doubt the company has gone on the warpath. With a stack of cash and three new acquisitions under its belt in barely a month, the industry is beginning to ask where it will go next.

At the start of July, the firm was acquired in a reverse takeover by business ISP Freedom4, formerly Vialtus, and before that the business brand of Pipex, itself now part of Tiscali.

The subsequent flotation of the combined assets of Daisy and Freedom4, renamed as Daisy Group, on AIM is thought to have raised over £80m to fund future acquisitions.

Just weeks later, the Group picked up the trading assets of AT Communications (ATC), which had fallen into administration, and Yorkshire-based comms and IT provider Eurotel.

Daisy moved quickly to land ATC after ATC revealed efforts to salvage the business following the delay of a £6m contract and the impact of cost-cutting had failed and it had appointed Grant Thornton as administrator.

The trading assets of ATC were picked up for £7m, and Eurotel set Daisy back £13.5m. In its last set of results, Eurotel’s unaudited revenue was £30.2m and EBITDA was £3.5m. ATC had revenue of £52.9m and EBITDA of £5.3m.

Daisy’s next buy came in mid-August, when it spent £17m on the telecoms assets of Redstone, including its mobile services and distribution unit Symphony.

While stock market regulations currently forbid Daisy from commenting publicly on its M&A plans, a statement issued by the firm to financial wire services following last week’s acquisition of Redstone heavily implies that further buys are on the agenda.

Matthew Riley, chief executive officer at Daisy, says, “This transaction is another step towards the group consolidating this fragmented sector and we will continue to pursue this strategy, building on our proposition of providing a truly converged product set to the SME and mid-market business customer.”

Chairman Peter Dubens backs up Riley. “Following our acquisitions of AT Communications and Eurotel, Daisy is beginning to build some important scale,” he says.

The firm has made no secret of its plans to build an independent communications powerhouse and has gone so far as to openly set its sights on BT. Whether or not this ambition is realistic remains to be seen, but Daisy is almost certain to open its war chest again.

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