Acquisition

RNS Number : 3488T

Anite PLC

03 October 2014

 



3 October 2014

ANITE PLC

Acquisition

Network Testing significantly expands its data analytics capability

Anite plc ("Anite" or the "Group"), the leading provider of software and hardware solutions to the international wireless market, today announces the acquisition of Xceed Technologies Inc. ("Xceed"), a US based wireless network data analytics software company. Xceed provides a leading range of wireless network optimisation and performance management products broadening Anite's product portfolio in the analytics and post-processing market, an area of significant operator focus and growth.

Acquisition highlights - the transaction 

·     Consideration of $30m paid in cash upon closing on a cash free/debt free basis from Anite's existing cash resources

·     Up to $5m additional deferred cash consideration dependent on the achievement of performance targets in the years ending 30 April 2015 and 2016

·     Xceed reported $11.8m revenue and $1.6m EBITDA in its financial year ended 31 December 2013

·     The acquisition is expected to enhance Anite's adjusted earnings per share in the current financial year before transaction and integration costs

·     Xceed will be integrated within Anite's Network Testing business where its products complement Anite's existing product portfolio.

Acquisition highlights - the business   

·     Xceed, based in the US just outside Washington D.C., designs and builds software solutions which enable operators to better analyse the performance of networks to improve voice and data service quality and optimise capacity

·     Xceed's products take data feeds on network performance from various sources, including drive test tools as provided by Anite, and analyses them to present operators with useful intelligence on ways to optimise their network performance

·     Xceed's products are:

−    WindCatcher, a desktop application used throughout the network lifecycle to design, deploy, monitor, optimise and benchmark network performance based on drive test and network data

−    Xynergy, a customer-configurable, enterprise-level analytics platform that automates key tasks in the network management life cycle, such as network acceptance, benchmarking, customer experience management and network performance for multi-vendor and multi-technology networks

·     Xceed products have very strong positions with tier one US operators which account for around 65% of Xceed's current revenues

·     As part of Anite, Xceed's solutions will be sold through Anite Network Testing's extensive global sales and distributor network.

Commenting on the acquisition, Christopher Humphrey, Anite's Chief Executive said:

"This acquisition transforms our Network Testing product portfolio in the increasingly important and growing data analytics market, which enables operators to identify and manage network performance issues.

"Anite's established market and technology leadership, and its substantial global sales and support footprint, combined with Xceed's acknowledged expertise and market leading software solutions, create a dedicated supplier with a more complete product offering.

"Xceed is an excellent addition to Anite's Network Testing business and the acquisition is expected to be enhancing to adjusted earnings. Anite retains significant financial resources to continue to invest in further growth opportunities."

Commenting on the acquisition, Bary Azmi, Xceed's Chief Executive said:

"Anite's Network Testing business is a natural fit for Xceed and we are delighted to have completed the transaction. Anite's established global reach and technology leadership, combined with Xceed's advanced software, will enable us to build on our success in North America and start to globalise our business."

For further information, please contact:

Anite plc                                                                                      www.anite.com/@AniteNews
Christopher Humphrey, Chief Executive                                                             01252 775200
Richard Amos, Group Finance Director
   
MHP
Reg Hoare/Giles Robinson/Jack Holden                                                           020 3128 8100

A conference call for analysts will be held today at 9.00am.

Please contact Giles Robinson or Jack Holden at MHP Communications

on [e-mail] or 020 3128 8788 for dial-in details.

Reasons for and benefits of the acquisition

Anite's stated strategy is to reinforce its position as a global leader in wireless test solutions, by continuing to achieve organic growth from further developments to its existing portfolio and by expanding into adjacent markets. Following the disposal of Anite's Travel business on 29 May 2014, Anite has retained significant financial resources to invest in growth opportunities, including acquisitions in closely related growth markets.   

Overall, Anite's established global market and technology leadership in network testing, combined with Xceed's recognised expertise in network optimisation solutions, will enable Anite's Network Testing business to transform its position in the data analytics market. We estimate this market to be worth c.£120m annually.

Anite has customers in over 100 countries, including more than 400 mobile operators, network equipment manufacturers, service contractors and regulatory bodies, and this transaction will enable Anite to build on Xceed's success in North America and extend its global reach.

Anite's focus on data analytics is being driven by the increasing complexity and growth of mobile networks and the continued evolution in technology from LTE to LTE-A. Maintaining the quality of experience for the consumer has become a key differentiator for operators, and network quality and coverage need to be constantly measured, monitored, analysed and optimised, which Anite's portfolio addresses.

Xceed's solutions are highly complementary to Network Testing's existing product portfolio and takes its existing analytics and post-processing tools to a new level. WindCatcher and Xynergy reflect the growing trend towards enterprise solutions and significantly upgrade Anite's existing capability and provide a growth platform in this high value market.

Approximately 45% of Xceed's revenues are from recurring maintenance, hosting and support which will improve the revenue profile of the Network Testing business.

This acquisition also brings a strong tier one customer base in North America, enhancing Network Testing's existing customer base.

About Xceed

Xceed is based in Chantilly, near Washington D.C. in the US. A total of 55 US employees and a small number of overseas contractors will transfer to Anite as a result of this transaction.  Xceed was founded in 2002 and has a strong market reputation for its WindCatcher and Xynergy technology. Xceed will be integrated within Anite's Network Testing business and will continue to be managed at the local level by its existing management team, led by three of its founders (Bary Azmi CEO, Ashok Sethu CTO and Sher Nasir COO) who remain fully committed to the business.

Xceed's financials and prospects

Xceed's results will be reported as part of Anite's Network Testing business going forward. In its financial year ended 31 December 2013, Xceed achieved revenues of $11.8m with $1.6m of EBITDA.  The business is expecting to report significant growth in its current financial year. Gross assets being acquired amounted to c.$3.5m as at 31 August 2014. The book value of net assets to be transferred on completion is expected to be $1.7m.

Anite expects to grow revenues through selling WindCatcher and Xynergy via Anite's global Network Testing sales channel and distributor network as well as taking advantage of the underlying growth of the analytics and post-processing market. Anite anticipates the business continuing its recent strong performance and track record in the medium-term given the opportunities in this growing market.

Acquisition terms and financing

The acquisition comprises the entire issued share capital of Xceed Technologies Inc. The consideration of $30m was paid in cash upon closing on a cash free/debt free basis from Anite's existing cash resources. $5m has been retained in escrow.

Additional deferred cash consideration of up to $5m is potentially payable dependent on the achievement of performance targets in Anite's financial years ending 30 April 2015 and 2016.

Anite is financing the cash consideration from its existing resources comprising its net cash (which stood at £49.1m as at 31 August 2014) and undrawn banking facilities of £30m.

Transaction and integration costs are expected to be $2.4m.

The Board expects that the acquisition will enhance Anite's adjusted earnings per share in the current year.

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