(Finance) – The market and analysts receive it coldly the news of potential acquisition of English Redcentric from WIIT, a company listed on Euronext STAR Milan and active in the Cloud Computing market. It all started on Friday, when Reuters reported WIIT’s interest in Redcentric, a cloud services provider listed on the London Stock Exchange. As per UK regulations, Redcentric has confirmed that they are preliminary negotiations underway with WIIT for a possible acquisition, with the Italian company having until June 21 to confirm interest to make a takeover offer or drop the deal.
Redcentric also nominated Lazard as his advisor in the company’s sale process. The company was worth £214m at the close on May 23, before jumping on Friday following the news.
“We believe that this is one of the various dossiers being evaluated and probably among those least advanced in terms of negotiations for which the chances that WIIT will be able to complete the operation seem low to us“, comment the analysts of Equity.
This isn’t the first time Redcentric has explored a sales process either. He had in fact announced a sales process driven by Stifel in 2020although discussions with buyers have not resulted in any formal offer after two months of talks.
Redcentric is a leading IT services provider in the UK, with cloud, cybersecurity, connectivity and communications solutions for the public and private sectors (clients include Channel 4, Heathrow Airport and the NHS). Founded in 1997, the company matters approximately 500 employees and 8 data centers in the United Kingdom. In the 2023/24 financial year (ending 31 March), the company generated revenue of £163.1m (+15.1% year-on-year), of which 91.4% was on a recurring basis. Adj. EBITDA was £28.4m, up 15.9% year-on-year (EBITDA margin of 17.4% versus c. 39% for WIIT).
“The negotiations are in a preliminary phase and there is no certainty that an offer will be made – comment the analysts of Intesa Sanpaolo – However, we believe that the potential deal, while dilutive in terms of EBITDA margin, would be in line with WIIT’s strategy to become a pan-European cloud operator and to expand its portfolio of services.”
It is also recalled that, in order to be more flexible in the execution of future M&A operations, WIIT has recently obtained the approval of the assembly for a potential capital increase through the issuance of a maximum of 7 million ordinary shares (representing 20% of the potential final number of shares in circulation, valued at approximately 120 million euros at current prices).
WIIT presents a unchanged trend compared to the day before and stands at 17.22 euros, after opening at 17.30 euros compared to 17.22 euros at Friday’s closing. The company capitalizes approximately 480 million euros.