Gamma Communications Share News (GAMA)

(Sharecast News) - Technology-focussed communications services provider Gamma Communications has acquired the entire issued share capital of Mission Labs, it announced on Wednesday, for initial consideration of £40.2m.
The AIM-traded firm said the purchase would give it additional capabilities in the "rapidly-evolving" markets of cloud contact centre and cloud communications.

It described Mission Labs as a well-established unified communications-as-a-service (UCaaS) technology business which had built a reputation for creating "technologically-advanced solutions" and delivering service to its customers and partners.

The acquisition of Mission Labs would enable Gamma to "enhance and expand" its cloud contact centre (CCaaS) technology.

In addition, it would also enable Gamma to accelerate its digital channel strategy, with the board noting that Mission Labs has a UCaaS technology platform called 'CircleLoop'.

CircleLoop provides a cloud-based telephony product which is fully serviced through web, desktop and mobile applications, and aimed at the micro-business market - a capability that would enable Gamma to address a key market opportunity in the UK and Europe.

Gamma had already been partnering with Mission Labs over the last 18 months on various projects such as 'PhoneLine+', which was a replacement product for single line customers that was set to launch in the first half.

The teams at each business knew each other well, Gamma reported, adding that the addition of the Mission Labs team would accelerate Gamma's ability to take advantage of structural changes in the market which were leading to a greater adoption of cloud services.

The initial consideration for the entire issued share capital of Mission Labs was £40.2m on a cash-free basis, with up to an additional £6.0m contingent deferred consideration payable over the next three years assuming certain development milestones were met on the existing and future product set.

Gamma said the initial consideration was paid in cash from its existing cash reserves.

As part of the transaction, management shareholders who previously owned 72% of the shares acquired had agreed to re-invest 10% of their cash proceeds into Gamma shares, which would be locked up for three years.

For the year ended 31 March 2020, Mission Labs had unaudited revenues of £3.4m, with adjusted EBITDA coming in at £0.4m, and net assets totalling £2.5m.

"The acquisition of Mission Labs is important to Gamma, and provides us with an opportunity to both reinforce and accelerate our UCaaS, CCaaS and digital technology and product capabilities across the group," said chief executive officer Andrew Taylor.

"This will enable Gamma to realise both current and future growth opportunities and ensure that we continue to successfully execute against both our immediate and long-term commitments."

At 0908 GMT, shares in Gamma Communications were up 0.09% at 1,551.4p.