Gamma Communications PLC on Tuesday said it has agreed to buy German business communication software company SF Technologies Holding GmbH, trading as Starface, for €196 million, as it said it expects to meet market expectations for 2024.
The Berkshire, England-based provider of communication services said the acquisition positions it as a market leader in the German small and medium enterprises cloud communications market.
Karlsruhe, Germany-based Starface employs around 260 people and serves SME businesses in Germany as well as Austria and Switzerland through its channel partner network.
Gamma said the acquisition is primarily funded through its £125 million existing cash resources, with the remaining £40 million funded through a new £130 million revolving credit facility.
The remaining portion of this loan will be available for further use, with a three-year term and the option to extend for an additional 12 months.
Starface is expected to deliver group revenue of around €44 million and adjusted earnings before interest, tax, depreciation and amortisation of around €15 million in the 2024 calendar year.
Gamma said the acquisition is forecast to be accretive to adjusted earnings per share in the 2025 financial year.
In a trading update on Tuesday, Gamma said it expects financial performance in line with market consensus in 2024, with adjusted Ebitda in the consensus range and fully diluted adjusted EPS in the upper half.
The company said the current consensus ranges are adjusted Ebitda between £124.0 million and £127.4 million and adjusted EPS between 80.3 pence and 88.4 pence.
Gamma reported adjusted Ebitda of £114.3 million and adjusted EPS of 75.1 pence in 2023, and said meeting the current consensus ‘demonstrates healthy year-on-year growth’.
It said there has been continued strong performance across both the Gamma Business and Enterprise business units in the UK, with gross margins ‘consistent’ with the first half.
Gamma said the closing net cash balance on December 31 increased to £153.7 million, up by 14% from £134.8 million in the previous year, prior to the Starface acquisition.
Gamma said it expects its move to the London Main Market to complete in the second quarter of 2025.
Chief Executive Andrew Belshaw said: ‘I am pleased with the results we have achieved in 2024. We have strengthened key relationships with our technology partners by helping them bring their products into our market, and with our channel partners, by providing them with an expanded range of products to sell to their SME customers.’
On the Starface acquisition, Belshaw said: ‘This acquisition marks a significant milestone for Gamma as we further strengthen our position in Europe’s cloud communications market. By combining Starface’s strong partner ecosystem and technical expertise with Gamma’s established connectivity capabilities, we’re delivering unmatched value to our customers and partners. Together, we’re not only strengthening our position in the German market but also shaping the future of business communications for SMEs across Europe.’
Shares in Gamma Communications were down 0.3% to 1,404.00 pence in London on Tuesday morning, after opening higher at 1,494.00p.
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