Daisy's M&A strategy blossoms with Alternative Networks deal

Alternative Networks' shares spike as £165m takeover announced

Daisy has reached an agreement with Alternative Networks to snap up the company in a deal which values it at £165.3m, sending its share price soaring.

In an announcement this morning, Alternative Networks said that the deal price represents a 17 per cent premium on its closing price last Friday. This morning, Alternative's share price rose as high as 335.19 pence per share, up 15 per cent from 291.25 pence per share on Friday afternoon.

Acquisitive Daisy claims Alternative is a "strong, complementary fit" with the group, and will build on its acquisitions of Damovo and Phoenix IT. Further, Daisy claims the buy will provide further business efficiencies and improved cross-selling opportunities.

Alternative's directors will recommend unanimously that shareholders vote in favour of the deal.

James Murray, chairman of Alternative Networks, said: "The combination with Daisy will ensure that the Company is best placed to capitalise on future growth opportunities and remain the provider of choice for our customers. In particular, the strong complementarity and strategic fit between Daisy and Alternative Networks will ensure our competitiveness and benefit our customers through access to a broader range of unified communications solutions".

Daisy's CEO Neil Muller added that the acquisition will "increase market share further".

TechMarketView analyst Martin Courtney said that the Alternative acquisition adds scale to the Daisy business, builds on its managed services offerings, and boosts its mobile and fixed-line product and service offerings.

In recent years, Daisy - which went private last year - has snapped up a number of firms including Damovo and Phoenix IT.

In Alternative's most recent results - for the six months ending 31 March, profit before tax fell 44 per cent annually to £3.1m on sales which slipped four per cent to £69.3m. It said at the time that despite challenges to its mobile business, it remained competitive.

TechMarketView's Courtney added: "The challenge for the newly integrated company will be to successfully co-ordinate the migration of customers off legacy analogue, circuit switched links and onto lower-cost IP connectivity services such as the unified communications and collaboration platform Daisy hosts in partnership with BT.

"The scope of Daisy's portfolio is broad, spanning telecoms and IT services. However, the strategic objective is focused - around convergence. The opportunities for the newly combined entity will be in the cross sale of services and identifying efficiencies. We'll have more for subscribers as the process moves forward."