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Suddenly it’s all about Canada! A couple of weeks ago it was Montreal-based CGI pitching for Logica. This time its Vancouver-based Peer 1 Network Enterprises (trades as Peer 1 Hosting) that is taking out NetBenefit, the managed hosting division of Group NBT, the internet services group of businesses that itself started life as NetBenefit.
Group NBT was taken private from AIM by HG Capital in September 2011 in a £153m cash deal. Prior to its take-out, Group NBT was turning over just under £50m with £7.2m PBT. Peer 1 is paying £25m cash for NetBenefit, which is expected to close the year to June 2012 with some £8m revenues and £2.5m in EBITDA. Group NBT was advised by Oakley Capital.
Peer 1 is also mid-market player, with a current revenue run rate of some C$130m (c.£80m) p.a and a 4% operating margin. A little over 25% of Peer 1’s revenues derive from its domestic market. Peer 1 have their European HQ in Southampton with UK data centres in London and Portsmouth. The UK appears to account for about 10% of costs of sales so I assume around the same on revenues, suggesting that NetBenefit will double Peer 1’s presence in the UK.
The SME hosting managed services market is hugely fragmented and consolidating at a pace. I am perhaps a little surprised that it wasn’t a UK consolidator that picked up NetBenefit, though the 3x revenues/10x EBITDA price might well have put off all but the very keen (e.g. by way of comparison see Iomart adds more tartan to the mix with EQSN). Who’s next, I wonder?