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Wednesday 16 May 2018

LoopUp bets the business on MeetingZone

logoIt's well over a year since we last wrote about AIM-listed London-headquartered conference call SaaS provider LoopUp (see LoopUp signals ‘moderated’ H2 profit) and it has to be said it's been an investor's dream!

Listing on AIM in August 2016 at 100p per share and a £41m valuation (see LoopUp dials into AIM), LoopUp's shares have just topped 450p on news of its proposed 'bet the business' acquisition of Warwick Holdco Limited, the holding company for UK-headquartered conferencing services provider MeetingZone Group, from private equity backer GMT Communications Partners for £61.4m cash. GMT acquired MeetingZone in July 2011 in a £38.5m MBO. Founded in 2002, MeetingZone had revenues of £11m at the time of the buyout.

I say 'bet the business' because this is a reverse-in by LoopUp, whose revenues were £17.4m last year compared to £22.4m for MeetingZone. Both businesses have similar EBITDA margins around the 20% mark. Whichever way you look at it, it's a huge meal to swallow, and LoopUp is planning to raise the dosh through a £50m placing at 400p per share and a £17m loan, given it had less than £3m cash left in the bank at the end of last year. The extra dosh will be used to shore up LoopUp's balance sheet, not surprisingly.

At first blush, the 'strategic fit' looks sensible though moves LoopUp away from being a SaaS pure-play to a broader conference services business, through MeetingZone's own audio conferencing services and its reseller arrangement with Cisco's Webex and Spark, and its value-add services product around Microsoft Skype for Business.

But strategic fit does not necessarily mean a marriage made in heaven, and the close relative sizes of the parties will undoubtedly present LoopUp management with their biggest challenge in the company's 15-year life.

Posted by Anthony Miller at '09:42' - Tagged: acquisition   placing   fundraising  

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