CANCOM UK&I acquired by Telefonica Tech for €398mn
Martin Hess of CANCOM UK&I
The executive board of CANCOM SE has signed a definitive agreement regarding the sale of the subsidiary CANCOM Ltd. to Telefonica Tech. As a result, CANCOM is divesting its entire business activities in the United Kingdom and Ireland.
The transaction values CANCOM Ltd. at an Enterprise Value of close to €400 million, which corresponds to a transaction multiple of 15.8x (Enterprise Value/EBITDA 2020A). The deal, at a multiple of 13.5x EV/OIBDA (based on 2021E), will strengthen the capabilities of Telefonica Tech’s cloud and cybersecurity division in the UK and Ireland.
CANCOM UK&I has 600 professionals, who will be joining the Telefonica Tech team, and a broad and strong digital services portfolio, including professional services and managed services in advanced IT, cybersecurity and multi-cloud solutions. It will realise a book gain of around €225 million through the deal, which will be included in CANCOM Group’s net profit for 2021.
Upon completion of the transaction, CANCOM SE will receive cash proceeds of around €390 million. The transaction is expected to be completed within the third quarter of this year. CANCOM intends to reinvest the proceeds predominantly in the acquisition of companies in its core regions, Germany, Austria and Switzerland. As a result of the transaction, CANCOM Ltd. will be reclassified as discontinued operations in CANCOM Group’s financial reporting.
“I am really delighted that CANCOM UK&I is becoming part of the Telefonica Tech family. This is a fantastic next step in our company’s growth. Telefonica Tech is a global tech powerhouse and we’re excited about what we will be able to deliver to our customers as Telefonica Tech in the UK&I. This is great news for both our customers and our employees,” comments Martin Hess, managing director CANCOM UK&I.
CANCOM UK&I is a certified Microsoft Gold Partner for 9 competencies, including Azure Expert MSP, CSP Direct, LSP, Surface Silver Partner and FastTrack, and it also has other relevant partnerships with technology vendors. The company reached €155 million in revenues in 2020, of which managed and professional services represent more than 50% and are growing differentially.
CANCOM UK&I will reach €190 million of revenues in 2021 with an adjusted EBITDA margin of 15.4% and revenues related to managed services and professional services revenues project differential growth rates of 20% and 26% CAGR18-21 respectively.
“Having the CANCOM UK&I talented team join Telefonica Tech will strengthen our cloud and cybersecurity capabilities in the UK and Ireland, with a strong focus on professional and managed services, and combined with our value proposition and global reach allows us to position ourselves as the strategic partner for our B2B customers in their digital transformation strategy,” comments Jose Cerdan, CEO of Telefonica Tech.
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