Investors to get €115m in sale of Data Electronics
UK rival negotiating deal to buy leading player in cloud computing
Published 02/08/2011 | 05:00
SHAREHOLDERS at Irish-owned Data Electronics look set to share a €115m windfall after a UK rival confirmed it is in talks to buy the company.
UK-listed Telecity said yesterday that it was negotiating a deal to buy its smaller Irish rival, which manages data centres and is a leading player in Ireland's emerging cloud computing industry.
Sources in Dublin said the takeover talks were ongoing and a deal could be announced as early as this week.
Telecity is thought to be offering around £100m (€114.323m) for the Irish company, which has invested €40m in developing its two data centres since 2008, including €15m on an eco-friendly installation in Dublin. Telecity is valued at £1.11bn and turnover last year was just under £200m.
Telecity operates 24 data centres, including one in Ireland, and is currently building three more. Its clients include social-networking giant Facebook.
Takeover talks come after the Irish company hired US investment bank Jeffries & Co, Irish law firm Matheson Ormsby Prentice and KPMG to advise on a possible sale last February.
Telecity is due to announce results for the first half of 2011 at an investor call on August 8.
Unusually for such a hi-tech business, Data Electronics has been in business for almost 40 years.
It was set up in 1974 by former Aer Lingus executive Liam Kehoe, who acted as managing director for 25 years until he became executive chairman in 2000. He retired in 2008 but has stayed on as a non-executive director since then.
Accounts filed with the Companies Office show that, with his family, he is still one of the biggest minority shareholders in the company.
Data Electronics is privately owned and does not publish a list of shareholders; however, company accounts filed last year show the directors of the company, including Liam Kehoe, hold around a quarter of ordinary shares.
Other shareholding directors who stand to benefit from a sale include current company chairman Brian Kelly and chief executive Maurice Mortell.
Telecity refused to comment on how much it was bidding for the Irish company, but a source close to the situation confirmed the offer was expected to be around £100m. Telecity is listed on the London Stock Exchange's AIM list and has about £300m in debt available to fund acquisitions.
Turnover at Data Electronics was just over €15m last year. It provides outsourced IT services to clients including bookmakers William Hill Online, Jurys Inn, and airport operator DAA. Its services also include cloud computing.
Around 65pc of Data Electronics' customers are international, which means its sales have remained strong despite the Irish recession.
Data Electronic's 55 staff were briefed yesterday on the latest developments.
Last night, a spokesman for Data Electronics said it was too early to comment on the takeover talks.
Shares in Telecity closed up 6.5pc at 559.50p each last night.