Zamano buys Red Circle in €24m reverse takeover deal
Mobile data and services firm Zamano has bought Dublin-based peer Red Circle in a "transformational" deal worth as much as €24.4 million.
The reverse takeover, which was warmly welcomed by analysts, will double the size of Zamano, expand its suite of brands and treble its subscriber base. Red Circle has more than 500,000 active subscribers in Britain, the US, Australia and Ireland.
"This is a very good deal," said Goodbody analyst Dan Kavanagh. "Zamano has been trying to add scale to its business for a while now and this does exactly that on a massive scale." The shares jumped 9 per cent, to close at 36 cent on light volume.
Under the terms of the agreement, Zamano will pay an initial consideration of €17.2 million on completion and make a further payment of as much as €7.2 million based on Red Circle's earnings before interest, tax, depreciation and amortisation (Ebitda).
To achieve the maximum payment, Red Circle will have to generate Ebitda of at least €3.9 million this year. In the year to the end of May it recorded Ebitda of €3.5 million on revenues of €31.1 million.
The payment will be split 75 per cent in cash and 25 per cent in shares, with the cash portion coming from a new loan facility with Bank of Scotland (Ireland). Prior to this Zamano had no debt.
John O'Shea, Zamano's managing director, said the acquisition was a "huge step forward" for the company, particularly in terms of expanding its presence in the US market.
The deal is subject to shareholder approval at an egm scheduled for December 13th.