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  • PEER 1 Hosting To Acquire Leading UK-Based Managed Hosting Provider

6th June 2012

PEER 1 Hosting To Acquire Leading UK-Based Managed Hosting Provider

Peer 1PEER 1 Network Enterprises, Inc., operating as PEER 1 Hosting, a Vancouver-based provider of IT infrastructure, today announced it has signed a definitive agreement to acquire all of the outstanding shares in the capital of NetBenefit (UK) Limited, a division of London-based Group NBT Limited, and a leading UK-based managed hosting company, for cash consideration of GBP25 million (US$38.5 million).

Transaction highlights 

  • The fully funded, all cash US$38.5 million transaction establishes PEER 1 as a leader in the UK managed hosting market;
  • The transaction is expected to deliver substantial financial benefits through the integration and migration of NetBenefit’s business and servers into PEER 1’s new 57,800 square foot flagship datacenter in the UK;
  • The transaction is expected to be immediately accretive to PEER 1’s earnings per share excluding acquisition-related and integration costs;
  • PEER 1 will finance the acquisition with cash on hand and availability under the Company’s existing credit facilities, including a US$25 million accordion facility that National Bank Financial Inc. (“NBF”) has underwritten in support of the acquisition; and
  • Closing of the transaction is expected to occur on or before June 30, 2012.

“This transaction vaults us into a clear leadership position in the UK managed hosting market and further underscores our commitment to the dynamic and growing EMEA region,” said Fabio M. Banducci, President and CEO of PEER 1. “NetBenefit shares our passion and reputation for quality and service and we are thrilled to welcome its employees, customers and other stakeholders to the PEER 1 Hosting family.  We believe our combined operating scale will allow us to market our shared leading-edge solutions to an even broader customer base across the EMEA region.”

Founded in 1995, NetBenefit is a division of London-based Group NBT Limited and is one of the UK’s longest-operating and most experienced providers of managed hosting services to small and medium sized businesses. NetBenefit has approximately 50 employees providing nearly 700 customers with hosting solutions and professional 24 x 7 x 365 technical support, provisioned and deployed principally from two leased datacenters located in the Greater London area. For the fiscal year ending June 30, 2012, NetBenefit is forecast to generate approximately US$12.5 million in revenue and US$3.8 million in EBITDA. Following the acquisition, NetBenefit will provide managed hosting services back to Group NBT under a three year contract valued at approximately GBP1.5 million (US$2.3 million) per year.

With PEER 1’s established operating presence in the UK and the opening of its 57,800 square foot green flagship datacenter in Portsmouth last fall, the Company has identified material cost synergies that can be realized from this acquisition, principally from datacenter lease cost savings, office rent savings, reduced support costs and certain headcount rationalization. PEER 1 plans to migrate NetBenefit’s server deployments from their existing leased datacenter space to PEER 1’s new wholly-owned datacenter on expiration of the datacenter leases. These cost synergies are expected to amount to approximately US$2.0 million and should be fully realized within 18 months following closing of the acquisition.

The Company expects to incur approximately US$2.6 million in one-time transaction, re-financing, and transition and integration costs, with the majority of these costs being recorded in the current fiscal fourth quarter and the first quarter of fiscal year 2013.

PEER 1 also announced today it has entered into an arrangement letter with NBF to act as sole lead arranger to syndicate US$150 million in new credit facilities.  The new facilities will comprise a US$100 million committed term loan facility and a $US50 million committed revolving credit facility.  In addition, the credit agreement will also include an un-committed accordion feature that will provide PEER 1 with up to a further USD $25 million, bringing the total potential credit available under the new credit facilities to US$175 million.

The credit facilities are subject to completion of NBF’s syndication, the preparation, execution and delivery of mutually acceptable amended and restated loan documentation, and other customary conditions and closing is expected to occur on June 30, 2012.The Company intends to use the proceeds of the new credit facilities for the repayment of existing credit facilities, capital expenditures, permitted acquisitions, and for working capital and general corporate purposes.

“Securing increased credit facilities on favourable terms ensures we retain access to non-dilutive capital, providing us with the financial flexibility to act on further opportunities in the wake of this transaction,” said Gary N. Sherlock, Executive Vice President and Chief Financial Officer of PEER 1. “We continue to evaluate an array of initiatives to grow both organically and through acquisition in multiple geographies, domestic and international.”

This entry was posted on Wednesday, June 6th, 2012 at 8:26 am and is filed under Business News, National News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
  1. Tami Quiring (@VillageGamer)
    10:27 am on June 6th, 2012

    .@PEER1 Hosting To Acquire Leading UK-Based Managed Hosting Provider http://t.co/xksyHgEK

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