Uxbridge telecoms company Daisy has been busy of late. Weeks after the company joined AIM via an £81 million reverse takeover of Freedom4 Group, Daisy made another two acquisitions, AT Communications Group Plc (ATC) and Eurotel, for a combined consideration of £20.5 million.

‘Our aim is to become a credible alternative to BT for mid-market businesses,’ says Steve Smith, Daisy’s director for M&A. ‘The reverse takeover of Freedom4 Group was the best way of accomplishing that.’

The opportunity to go public proved irresistible for Daisy as ‘it means we can raise funds from institutional investors for further expansion’’. In addition to access to cash, the company was keen to join AIM: ‘If we had listed on the main exchange, we would need to gain shareholder approval to acquire a company that is 25 per cent larger than us. We were worried this would make us uncompetitive.’

Double acquisition bliss

Daisy was established in 2001 and grew organically until it reached a turnover of £23 million, after which it made its first acquisition. Eight years later, the company has completed its 24th deal.

If the reverse takeover of Freedom4 took Daisy to new territory, the acquisitions of ATC and Eurotel sees the company on more familiar ground: ‘The companies complemented our service lines in fixed line, mobile and broadband services. They also had a good SME customer base and Eurotel brought a phone installation and maintenance business that was new to us.’

Adds Smith: ‘We were interested in the businesses for a while and they went into administration. We were in a better position to acquire the companies compared with rival bidders. We had raised the money already and we didn’t need shareholder approval.’

Smith is unfazed by the downturn: ‘Telecoms is a very competitive market, but I wouldn’t say it has been more affected by the recession than other industries.’

That said, there are causes for concern. Eurotel’s installation business was severely affected by the recession because it relied heavily on lease finance for its equipment. Smith comments: ‘People are saying that the situation is bottoming out for lease finance and it is returning.’

In any case, Daisy is well prepared for further expansion: ‘We still have lots of money for further acquisitions. We also have a pool of institutional investors who could support fund raising and we have a low level of gearing, so we wouldn’t find it hard to get a bank loan if necessary.’