Fast growing engineering services group Renew Holdings is to buy Clarke Telecom in a £17m cash deal that will give it a foothold in the highly lucrative mobile phone base stations market.
Leeds-based Renew said the deal will be immediately earnings enhancing and the market welcomed the news, prompting an x per cent rise in Renew’s share price to xp last night.
Clarke is a £33m turnover business that serves a wide range of blue chip customers including O2, Vodafone, EE, Ericsson, Nokia and Siemens.
It provides the civil, mechanical and electrical engineers who are needed to build, repair and modernise mobile telecoms base stations.
Renew’s finance director John Samuel said the acquisition of Clarke is absolutely core to renew’s strategy of supporting critical UK infrastructure.
“It takes us into the mobile telephony market, which is arguably the most critical part of all UK infrastructure,” he said.
“Mobile demand and 4G is driving this market. Network operators need more more bandwidth, more capacity and more power, so there is a constant reconfiguration of base stations.”
Vodafone and O2 are currently in the process of moving to share base stations, but they both have different equipment which Clarke is moving to the shares sites.
Analysts welcomed the deal.
Howard Seymour at Numis said: “The acquisition of Clarke Telecom will be earnings enhancing by some 16 per cent and in our view the investor focus should be on how Renew is exploiting its business model strength to add complementary engineering services into growth areas.
“Hence while Renew’s organic opportunities remain significant, Clarke is a further move to provide a range of self-delivered services that boosts the engineering services margin and growth proposition. We raise our target price from 215p to 260p to take account of the earnings increase and retain an ‘add’ recommendation.”
The Clarke management team and all the staff will be kept on following the deal.
“We’ll be keeping all the staff on. It’s the usual Renew strategy.”