Anite acquisition

Anite is a global provider of hardware and software solutions, systems integration and managed services within its core markets of Wireless and Travel. I have a holding in my growth portfolio (epic code: AIE).

Anite announced today the acquisition of Xceed Technologies Inc., in what is the first use of the £45m proceeds from the sale of their Travel business back in May.

Xceed is a US based wireless network data analytics software company based just outside Washington DC.  They reported $11.8m revenue and $1.6m EBITDA in their financial year ended 31 December 2013.

Consideration for the purchase is $30m paid in cash upon closing on a cash free/debt free basis and up to $5m additional deferred cash consideration dependent on the achievement of performance targets in the years ending 30 April 2015 and 2016. 

So on completion this values Xceed at 18.75x EBITDA (21.9x including potential deferred payments), compared to Anite's multiple of 10.3x, so dilutive, but management state that "...The acquisition is expected to enhance Anite's adjusted earnings per share in the current financial year before transaction and integration costs..." as the acquisition will be replacing the low returns from the equivalent amount of cash.

It is likely that acquisitions will be highly priced in Anite's market space, but this does look as if it is at the top end, that will only prove to be a wise purchase if its growth profile is first class.