Cavendish Corporate Finance is pleased to announce that it has successfully advised on the £7.3 million sale of spyware and intelligence solutions leader Datong plc to Seven Technologies Holdings, an engineering business specialising in the manufacture of communication applications for operation in inhospitable environments.
The deal creates a £20 million annual turnover company, which will be one of the strongest independent players in the sector, with an enhanced capability to develop next-generation solutions for its increasingly global client base.
Datong has for over 30 years specialised in providing a range of covert surveillance, tracking and location systems to defence, security and law enforcement agencies worldwide and its robust family of products and systems are designed to provide reliable, uncompromising intelligence in the most challenging operational environments.
The type, size, technology, methods and intensity of both terrorist and crime organisations, their activities and arenas, are constantly shifting and posing new threats.
Datong’s products and solutions help police and security agencies to gather early intelligence so that they can identify and anticipate threats and illegal activity and act to thwart them.
Headquartered in Leeds, Datong also has offices in the US and Malaysia and a range of security clients spanning over 30 countries, which the company helps ensure maintain a technology advantage over their increasingly sophisticated and determined adversaries.
Seven Technologies Holdings is the parent company of Northern Ireland-based Seven Technologies Limited (STL), which has been trading since 2005. Last year YFM Equity Partners, a specialist SME fund manager, paid £6.6 million to take a stake in Seven to help SLT’s growth and development.
STL has a wide range of capabilities such as software, electronics and mechanical engineering that it employs to create bespoke solutions for rugged requirements, typically involving use in harsh conditions prone to extremely high or low temperatures.
Both sets of management believe that the two businesses are an excellent fit and that there is a strong commercial and cultural affinity between Datong and Seven, in terms of their strategies, products and service offerings.
Combining the two businesses creates a larger and stronger group within the specialist intelligence technology sector, which will benefit from additional scale and a wider customer base.
It will also enable the enlarged company to tender for larger projects and cross-sell products from each group into the other’s markets as well as providing a stronger platform for further international expansion.
The initial announcement of the recommended cash offer of 50 pence for each Datong share, valuing the fully diluted issued share capital at £7.3 million, was made earlier this month.
Following receipt of acceptances of over 90 per cent the offer was declared unconditional today.
The deal was led by Cavendish partner Joe Stelzer and director John Farrugia.
Cavendish recently bolstered its partnership and further strengthened its technology media and telecoms (“TMT”) sector team with the hire of former Clearwater Corporate Finance partner Nick Jones as a partner to focus on TMT and other dynamic companies. Other members of the TMT team, include partners Raymond Fagan and Linda Sullivan.
Cavendish completed on 17 company sales in 2012 and recent TMT transactions include the sales of: Red Box Recorders, a call recording specialist business to ISIS Equity Partners, Helios, Europe’s leading independent air transport consultancy, to Egis Avia; First City Care, the security solutions firm, to Tyco UK; Primal Pictures Limited, the online education company, for £12m to Informa UK; The Profile Group Limited, a fashion information service, for £8m to Centaur Media plc.
Cavendish is a member of M&A International, the world’s leading international M&A alliance, which since January 2012 has completed 62 TMT transactions.
John Farrugia, who led the transaction for Cavendish Corporate Finance, said:
“Global threats from terrorist and international crime organisations are constantly changing and this deal will help the enlarged group deliver enhanced intelligence solutions for its broad range of clients to address these evolving challenges and assist it in capitalising on the opportunities these trends present.
“The Group’s products and systems are world-leading and are increasingly being used by defence and law enforcement agencies worldwide for their security and surveillance needs.
“The specialist intelligence technology sector is attracting attention from a wide range of potential buyers. Its fundamentals are supported by the escalating threats from criminal and terrorist groups faced by governments and security agencies.
“Leading businesses in this sector, with proven technology and systems, loyal clients and credible growth plans can command high multiples and strong exit prices.”