French telecom firm poised to buy KN Group in €150m deal
Irish specialist utilities service provider KN Group is set to be bought by a French peer for more than €150m, the Irish Independent can reveal.
The buyer is Circet, a leading French telecommunications contractor with annual revenues of almost €800m that is backed by Advent International, an American private equity firm.
The proposed amalgamation, which is in the final stages of agreement and is subject to European competition law clearance, would result in a windfall for Donagh Kelly, KN Group's chief executive.
The parties did not disclose the consideration being paid but it's believed a company of KN's scale will fetch over €150m.
Mr Kelly, who is listed in KN's UK Companies Office filings as being a "person with significant control", owning at least 75pc of the business directly or indirectly, will continue to lead the €350m turnover KN group.
He will also assume the position of deputy CEO to Circet CEO Philippe Lamazou.
KN, advised by Clearwater International, will retain its senior management.
Both companies will continue to operate under their own brands, with little change to either business in their respective geographies anticipated. KN, which has significant contracts with the two largest telecoms operators in the UK and Ireland, provides services to clients including Eir, Vodafone, Sky, Virgin, BT, ESB and the London Underground.
It will continue to operate under the KN brand and there is no intention to centralise any functions to France.
"Over the last number of years, the management team has been looking at strategic options which would allow KN to continue its recent strong growth trajectory," Mr Kelly told the Irish Independent.
"The partnership with Circet quickly emerged as an obvious solution allowing us to undertake ambitious network rollout plans across Ireland, the UK and internationally.
"The deal, which is subject to anti-trust clearance, will further increase the scale and expertise KN can offer our clients.
"It will also enable us to provide an enhanced fully managed service, along with the stability required to service our customers' growth plans. A planned reinvestment by the KN shareholders in the new relationship will build a foundation for the growth of the two businesses in partnership."
Mr Kelly said anti-trust clearance is expected before the end of the year.
KN, which employs 2,500, is a leader in Ireland in providing services to the telecoms, power, and transport infrastructure sectors among others. It builds the physical infrastructure required for fibre broadband services, for example, as well as working to build power networks.
That provides plenty of opportunity for growth in the Irish market as efforts to get broadband to rural homes and premises continue. In addition, growth in the data centre industry here and the associated need for power generation may also benefit KN.
The business performed strongly in its last financial year, according to its most recent accounts, which cover the 12 months to the end of February 2017. Turnover was up 15.5pc year-on-year to more than €231m. Operating profit also grew sharply, by almost a third, to €11.1m.
As for Circet, it was recently acquired by Advent International. In 2017 Circet had sales of around €750m with around 3,200 employees.