TIDMGAMA
RNS Number : 9337Q
Gamma Communications PLC
03 March 2021
3 March 2021
Gamma Communications plc
Acquisition of Mission Labs Limited -- a leading developer of
applications to manage cloud contact centres and enhance customer
experience
Gamma Communications plc ("Gamma"), a leading technology-based
provider of communications services to the business markets in the
UK and mainland Europe is pleased to announce that it has acquired
the entire issued share capital of Mission Labs Limited ("Mission
Labs") on 2 March 2021.
This acquisition gives Gamma additional capabilities in the
rapidly evolving markets of Cloud Contact Centre and Cloud
Communications
As a key part of Gamma's long-term growth strategy, it has
previously stated an ambition to build on its success in the UK
UCaaS market by developing complementary products and routes to
market. Mission Labs is a well established UCaaS technology
business which has built a reputaton for creating technologically
advanced solutions and delivering great service to its customers
and partners. The acquisition of Mission Labs will enable Gamma to
enhance and expand its cloud contact centre (CCaaS) technology.
Gartner predicts that by the end of 2025, 57% of the UK's 850,000
contact centre agents will be using a CCaaS solution (today it is
25%). The acquisition sits alongside Gamma's acquisition of Telsis
in November 2019 which resulted in the launch of the fully
integrated Horizon Contact Centre on 2 March 2021. Horizon Contact
Centre is a CCaaS product aimed at the SME market. Gamma is now
able to provide solutions for the entire business market in the UK
and Europe, ranging from small to large Enterprise customers.
In addition, the acquisition will enable Gamma to accelerate its
digital channel strategy. Mission Labs has a UCaaS technology
platform called CircleLoop (www.circleloop.com). CircleLoop
provides a cloud-based telephony product which is fully serviced
through web, desktop and mobile applications and aimed at the
micro-business market. This capability will enable Gamma to address
a key market opportunity in the UK (and Europe). Cavell Group
estimates that, by the end of 2025, in the UK, 2.7m employees of
micro-businesses will be UCaaS users (double today's volume). The
CircleLoop platform will allow Gamma to access that market.
Moreover, Cavell estimates there will be an additional market of
3.5m micro business users of UCaaS in the Netherlands, Spain and
Germany (Gamma has existing operations in each of those
countries).
Gamma is pleased to be welcoming a talented and experienced team
that has succesfully developed and deployed cloud software
solutions. This team will work with Gamma's existing,
highly-skilled technology team to develop and deliver an exciting
roadmap of UCaaS and CCaaS products.
Acquisition rationale
Gamma has been partnering with Mission Labs over the last 18
months on various projects such as PhoneLine+ which is a
replacement product for single line customers; this will launch in
H1. The teams at each business know each other well. The addition
of the Mission Labs team will accelerate Gamma's ability to take
advantage of structural changes in the market which are leading to
a greater adoption of cloud services. UCaaS and CCaaS currently
have low levels of adoption across all markets, and represent
growth opportunities for Gamma. Moreover, the capabilities being
acquired will allow the Group to bring new products and services
into those markets.
Mission Labs has built an excellent reputation in the UK
Enterprise segment, and when combined with Gamma's indirect and
direct sales, service and delivery capabilities, it is believed
that this will accelerate growth of CCaaS product sales to both
existing and new Enterprise and Public Sector customers in the UK.
This will be extended to Europe over time.
Mission Labs brings a well established relationship with Amazon
Web Services, whereby they have been supporting and augmenting the
capabilities of Amazon's contact centre technology with large
Enterprise customers since 2017. It is believed that this will
provide further opportunities across the business market.
Consideration
The initial consideration for the entire issued share capital of
Mission Labs is GBP40.2m on a cash free basis with up to an
additional GBP6.0m contingent deferred consideration payable over
the next three years assuming certain development milestones are
met on the existing and future product set.
The initial consideration was paid in cash from Gamma's existing
cash reserves (Gamma had a cash balance of GBP54m at 31 December
2020). As part of the transaction, management shareholders (who
previously owned 72% of the shares acquired) have agreed to
re-invest approximately 10% of their cash proceeds into Gamma
shares which will be locked up for three years. These shares will
be issued by Gamma following the announcement of its 2020 full year
results on 23 March 2021. The price will be based on the the
average of daily closing price over the 30-day period prior to the
release of results.
Mission Labs Financial Performance
For the year ended 31 March 2020, Mission Labs had (unaudited)
revenues of GBP3.4m - revenues are increasing rapidly. Operating
profits (adjusted EBITDA) for the period were GBP0.4m and at 31
March 2020 the business had net assets of GBP2.5m (unaudited).
As well as the recurring revenues from the sale of CCaaS and
UCaaS products, revenues are also generated from development work
undertaken for clients. Annual run rate revenue at the time of
acquisition had grown to approximately GBP8m (unaudited). While the
acquisition is expected to be accretive from day one, additional
investment is planned which is expected to deliver greater growth
over time.
The acquisition is not considered a substantial transaction as
defined in AIM Rule 12.
Background to Mission Labs
Mission Labs has been providing communications platforms and
solutions since 2016. It offers proprietary contact centre and
cloud communications products as well as tailored managed
services.
Headquartered in Greater Manchester, Mission Labs employs over
90 people. An experienced management team is led by the co-founders
- Damian Hanson and David Hague. They will be remaining with the
business and leading their team through the next stage of Mission
Labs' development.
Andrew Taylor, Gamma's Chief Executive Officer, commented: "The
acquisition of Mission Labs is important to Gamma, and provides us
with an opportunity to both reinforce and accelerate our UCaaS,
CCaaS and Digital technology and product capabilities across the
group. This will enable Gamma to realise both current and future
growth opportunities and ensure that we continue to successfully
execute against both our immediate and long-term commitments. On a
personal level, and on behalf of everyone at Gamma, we warmly
welcome all of Mission Labs' staff and customers into the Gamma
family and we look forward to working with them."
Damian Hanson, Co-founder of Mission Labs, commented: "We are
delighted to become part of the Gamma family and we see this as the
next step in the development and continued growth of our business.
We believe that we can combine our products, development and
commercial teams with those of Gamma to drive the strategy of the
business we have built to the next level. It is great to have found
a partner with similar ethos and forward thinking vision."
For further information please contact:
Gamma Communications plc Tel: +44 (0) 333 006 5972
Andrew Taylor, Chief Executive
Officer
Andrew Belshaw, Chief Financial
Officer
Tulchan Communications LLP Tel: +44 (0) 207 353 4200
James Macey White
Matt Low
Investec Bank plc (NOMAD & Tel: +44 (0) 207 597 5970
Broker)
Patrick Robb
Virgina Bull
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