LONDON, UK: Thetis Bidco Limited, a member of the Wavenet Group and also a subsidiary of Macquarie Group Limited, reached an agreement on the terms and conditions of a recommended all cash offer for the entire share capital of AdEPT Technology Group at the rate of 201 pence/share translating into £50.3 million.

The UK technology managed services industry remains diverse and unconsolidated. Wavenet Group sees a significant opportunity to build a broad suite of technology managed services products, and continue to diversify its customer base into attractive customer sectors, via the acquisition of complementary businesses like AdEPT.

The board and management of Wavenet believe that scaled operators, with broad product capabilities, will benefit from outsized market growth.

Wavenet has a track record of successfully acquiring and integrating businesses; AdEPT Technology Group would represent the fifth acquisition made in less than two years since MPRC Europe Limited’s initial investment into Wavenet.

Wavenet believes that there will be an opportunity to take best practice from both groups across all operational functions to enhance the way services are delivered to an expanded client base.

AdEPT Board believes that the AdEPT operating platform will continue to strengthen AdEPT’s relationships with key partners, customers, and major UK network operators, deploy a greater range of capabilities to both new and existing customers and leverage its strong supplier relationships, driving organic growth.

However, whilst the AdEPT Board believes its strategy is capable of delivering long-term growth and profitability, it recognises that uncertainties and risks exist in the short-term, most of which are beyond AdEPT’s control.

Supply chain constraints, whilst being mitigated to a large extent, continue to provide challenges and these, combined with cost inflation headwinds and a deteriorating macro environment, are impacting AdEPT’s near-term growth.

The AdEPT Board believes that the weak macroeconomic outlook in the UK is placing significant pressure on many smaller quoted companies. The AdEPT Board believes that the current market capitalisation of AdEPT is affecting its ability to raise new capital at sensible valuations and, therefore, its ability to optimise AdEPT’s growth over the medium term.

Commenting on the acquisition, Ian Fishwick, Chairman of AdEPT, said: “Since its formation on 1 January 2003, AdEPT has been on a strategic journey that has latterly focussed on building scale and broadening its service offering in a fragmented industry and a mission to create a highly respected managed service provider to empower its customers to take advantage of the benefits of a wealth of technology from class-leading partners in a unified way.

As a result of this strategy, AdEPT has been transformed into one of the UK’s leading independent providers of IT managed services, connectivity, unified communications solutions, and cloud services. AdEPT is now an award-winning company that delivers services for a broad range of public and private sector clients with a resilient, highly recurring, cash generative financial profile underpinned by its ‘One AdEPT’ philosophy and operating platform.

Whilst we believe that the AdEPT platform can deliver long-term growth and profitability, we also recognise that uncertainties and risks exist in the short to medium term which impact AdEPT’s ability to optimise growth as a stand-alone quoted entity. We acknowledge the additional commercial benefits which could be obtained as part of a larger, well-funded group, and believe the combination of AdEPT with Wavenet will enable the next phase of AdEPT’s growth to be strongly supported.

Given the balance of future opportunities and risks, we are comfortable that the Acquisition fairly recognises the medium-term prospects and growth potential of AdEPT as a standalone business and provides AdEPT Shareholders with an immediate, certain and attractive value in cash.”

Bill Dawson, Chief Executive Officer of Wavenet, said: “I am delighted to announce the proposed combination of the AdEPT business with the Wavenet Group. I have huge respect for the leadership of Ian Fishwick and the significant achievements of the AdEPT team. They have created a leading AIM-quoted Managed Service Provider delivering to a variety of top tier clients. We look forward to working with the AdEPT team as part of the Wavenet Group and driving growth by focusing on the best of both Wavenet and AdEPT’s skills and services. I am also grateful for the support of AdEPT’s largest shareholder, Christopher Kingsman, who has been very supportive of this proposed transaction since the beginning.”

Adam Joseph, Senior Managing Director, Head of Private Equity, Europe for the Macquarie Group, said: “We invested into Wavenet Limited in early 2021 and are delighted to back Bill Dawson and his team again in this strategic acquisition. The combined Wavenet and AdEPT business will have an excellent product offering and AdEPT’s education presence in particular will add scale in an attractive end sector. On completion the enlarged Wavenet Group will have pro forma annual revenues of over £200 million – triple the level at the time of our initial investment.”