Acquisition in the Netherlands
Gamma has announced the acquisition of DX Groep BV (Dean One), a leading telecoms group based in the Netherlands and one which it has known for some time. Funded from its existing cash resources, Gamma will pay up to €27.2 million with an initial consideration of €13.2 million and up to €14.0 million payable next year. Total consideration will be based on 7.5x the 2019 EBITDA of the acquired business which compares to Gamma’s historical ratio of over 21x. This attractively-priced acquisition represents Gamma’s first entry into a local channel in a new geographic market. The Board notes that Dean One can be ‘a focal point through which Gamma can broaden its geographic footprint in the medium term’. This evolution of Gamma’s strategy brings the opportunity to build a business which taps strong market growth in the Netherlands in the same way that it has succeeded in the UK. It also suggests that other European markets may be considered in the future. In addition, Gamma notes that a number of revenue synergies have already been identified. We increase estimates to reflect the acquisition with the main impact on FY 2019E and FY 2020E where our Adjusted EBITDA numbers increase by 4%.