Daisy joins AIM via reverse takeover

Business-to-business telecoms provider Daisy Communications is joining AIM following the reverse takeover of Freedom4 Group.

Freedom4, which was spun out of Pipex before the internet service provider sold its main business to Tiscali, is buying Daisy for £81 million in cash and new shares and, at the same time, acquiring another telecoms business, Vialtus, for £42 million from its chairman Peter Dubens. The merged company will retain Daisy’s name and be led by its current chief executive, Matthew Riley, who has featured in Business XL’s Rising Stars and Power Top 50 rankings over the past year. Riley will personally receive £27 million in cash and £46 million in shares from the deal.

Daisy is an experienced acquirer, having bought 24 companies during its eight years of existence, enabling management to hone their ‘consolidation and integration skills’, says Riley. ‘Daisy and Vialtus are two highly synergistic businesses; we believe that together they will be able to provide SME and mid-market customers with an effective and attractive one-stop-shop offer, and provide us with the solid foundations for our plans for future growth,’ he adds.

Freedom4’s entrepreneurial chairman Dubens, whose Oakley private equity vehicle is the Vialtus vendor, offers a macro-economic rationale for the deal: ‘We are seeing an opportunity in the UK telecoms services market at the moment where the fragmented nature and depressed valuations in the sector create conditions which are well-suited for generating value through consolidation.’

The company is proposing to raise £83 million to complete the deal and is expected to be valued, once the transactions are complete, at more than £200 million.

Freedom4’s shares swung up from recent levels around 2.25p to a year’s high of 4.39p on the news.