AdEPT Tech.Group PLC – Acquisition and Extension of Bank Facility

AdEPT Tech.Group PLC – Acquisition and Extension of Bank Facility

AdEPT Technology Group plc, one of the UK’s leading independent providers of managed services for IT, connectivity, unified communications solutions and cloud services, announces that it has signed an agreement to acquire the entire issued share capital of Advanced Computer Systems Group Limited and its trading subsidiary Advanced Computed Systems Limited,  a well-established UK based specialist provider of IT services focused on the education sector.

Acquisition highlights

  • Initial consideration of £5.24 million less the net debt of ACS Group at 31 March 2019 
  • Expected to be earnings enhancing from completion 
  • AdEPT group revenue run rate anticipated to increase by approximately 9%
  • Highly complementary IT services product set with SAGE expertise that can be cross sold into AdEPT clients 
  • ACS Group further enhances the AdEPT education strategy with approximately 200 schools and academy trust customers 
  • Highly experienced vendors to remain with ACS Group 

Strategic rationale 

ACS Group offers its clients the delivery of IT solutions and is focused on the education sector with complementary software support expertise around SAGE and SIMS.  The highly skilled team, together with the well-matched customer base and product set at ACS Group will complement AdEPT’s existing IT managed services offering where AdEPT provides services to thousands of schools and academy trusts.

ACS Group, based in Doncaster, provides a geographical extension to the existing education focused centre of excellence of AdEPT based in Orpington, and offers an opportunity for cross-sell the software and applications developed by the in-house software team at AdEPT.  Post-acquisition the Company will look to consolidate supplier agreements and integrate various services of ACS Group into the Orpington office of AdEPT.

ACS Group is our second acquisition in Yorkshire, following the acquisition of ETS Communications Limited (“ETS”) in November 2018. The IT skills of ACS Group are highly complementary to the unified communications expertise of ETS and it is anticipated that they will work closely together. 

AdEPT and ACS Group have both adopted capital asset light strategies which are highly cash generative and are dedicated to offering a full suite of IT services. 

Further details of the acquisition are set out below.

Phil Race, Chief Executive of AdEPT, commented:

 “We are delighted to have acquired such a high-quality business with the highly experienced vendors remaining with ACS Group post-acquisition.  AdEPT has an existing education focused IT service operation in Orpington – the acquisition of ACS Group builds on this capability and extends the geographical reach of AdEPT’s IT services to Yorkshire. ACS Group has a well-developed customer base with long term relationships, which builds upon AdEPT’s existing strong education presence.  The acquisition is expected to be earnings enhancing from completion.” 

Kevin McEwen, Managing Director of ACS, commented: 

“After having operated the business for 20 years we felt the time right to look for a new home in order to provide our clients and prospects with a broader range of products and services.  Our education focus, providing a broad range of expertise to more than 200 educational establishments, alongside our commercial clients means that AdEPT is an incredibly complementary home for our business.  We very much look forward to working with the team at AdEPT on the integration and evolution of our business over the coming years.”

Extension of Bank Facility 

  • Debt facility enlarged to £40 million 
  • Increased capacity to support acquisition growth strategy

The Board of AdEPT also announces that it has signed a £5 million extension to its existing £35 million 5-year revolving credit facility agreement, enlarging the total debt facility to £40 million.  The incremental £5 million tranche of the revolving credit facility is available in the period through to 30 June 2020.  The remaining £35 million of the revolving credit facility remains available for the 5-year term to 31 January 2022. 

The enlarged facility is to be provided by Barclays Bank Plc (“Barclays”) and The Royal Bank of Scotland Plc (“RBS) on an equal basis.  The facility will be used by AdEPT to fund acquisition of businesses that extend the AdEPT product set and by being part of the AdEPT group, will benefit from economies of scale.  The commercial terms of the enlarged facility remain the same as the existing facility. 

Ian Fishwick, Chairman of AdEPT, commented:

“We are delighted to have obtained the continued support of the teams at RBS and Barclays to provide an enlarged syndicated debt facility.  This enlarged bank facility provides the Company with additional funding to undertake the acquisition of ACS Group as AdEPT continues with its strategy of acquiring and integrating earnings enhancing businesses.”

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