Irish telco Magnet has acquired the Irish retail business division of Imagine Communications in an all-cash transaction. The deal will see Magnet become the third largest provider of business telecoms in Ireland, effectively doubling its customer numbers to 11,000 SMEs and corporates.
This will give it a market share of about 9 per cent, placing it behind Eir and Vodafone. The company was advised by Key Capital Corporate Finance on the transaction.
Magnet will now employ 95 people, including the 17 staff (mostly sales) from the acquired business, with plans to hire additional workers in the coming months. Debt funding for the deal was provided by investment group Blue Bay.
Imagine’s decision to sell its retail business division is part of a strategic shift to focus on the national rollout of its 4G Long-Term Evolution network, which will bring high-speed broadband services to businesses and consumers in rural Ireland.
Established in 2004, Magnet and its parent Columbia Ventures Corporation have invested more than €120 million in developing an advanced telecoms network. Its customers include ESB, Adobe, Lidl, Fáilte Ireland and Centra. The company is also operating in the UK market and has a contract to provide services to online retail giant Amazon at various locations across Europe.
Magnet offers a range of broadband, voice and cloud telephony solutions along with hosting and domain services. It has headquarters in Dublin with offices in Galway, London and Pune in India.
Since the economy crashed in 2008, Magnet has pulled back from the residential market. It has stopped offering TV services and now just provides contract-free, high-speed broadband to about 8,000 residential customers.
Magnet chief executive Mark Kellett said the acquisition marked a "step-change" for the company.
“Our strategy is to provide a credible choice to businesses of all sizes across Ireland based on the quality of our network and range of services, which we believe are the best in the country. We are delighted to welcome our new customers and staff to Magnet,” he said.
The Irish Times
, Mr Kellett said the deal would double the company’s revenues with a “sizable proportion flowing through to Ebitda and cash. I see a bright future for the company but a more focused one.”
Magnet has made a number of previous acquisitions. In 2005, it bought wireless broadband provider Leap and later added internet services provider Netsource to complement its business division. Three years later it bought Irish VoIP provider Glantel, while in 2012 it acquired a 90 per cent share of Velocity 1 as it expanded into the UK.
Imagine Group chief executive Sean Bolger said: "With the industry shift to next generation infrastructure driven by the need and demand for high-speed broadband and IP services, the strategic opportunity and focus of Imagine and its investors is to extend the reach and deliver fibre-based NGA services to regional and rural communities across Ireland."