The Bulgarian IT group sold its telecommunication business in Europe to one of the fastest growing companies in the field of notifications and mobile services – the Norwegian LINK Mobility Group ASA. The total price is € 8.8 M and the deal is expected to close by the end of April.
The sale price was calculated based on a 5.5 multiple of the consolidated EBITDA estimated at € 1.6 M for 2017. The final price to be paid will be determined on a ‘cash-free /debt-free’ basis, with normalized net working capital of the acquired companies for the 12 months prior to the date of the sale.
The payment will be done in three equal instalments. The first 1/3 will be transferred at the time of the transaction. The second part will be paid 3 years after the closing, with an annual interest rate of 4.75%, payable quarterly. The final 1/3 of the amount will be paid in LINK shares at the closing price of the Oslo Stock Exchange the day before signing of the Term Sheet.
The transaction involves five companies from three countries: Terra Communications AD, Teravoice EAD, and Alterpay EOOD from Bulgaria, Teracomm RO SRL (Romania) and Tera Communications DOOEL (Macedonia). The companies work in the field of value-added telecommunication services, mobile marketing and notifications. Their clients include mobile operators, banks, municipalities and merchants. Companies’ 2017 revenues are expected to be € 11.9 M, representing the majority of Allterco holding’s total sales proceeds. After the sale, the Bulgarian company will focus on the development of its Internet of Things (IoT) business. Allterco Robotics, one of the major companies in the group, offers solutions in the IoT field.
Allterco, which is listed on the Bulgarian Stock Exchange and has a market capitalization of about BGN 32 M (€ 16.4 M), is a provider of mobile services operating in Europe, Asia and the USA. The company has more than 100 employees in its offices in Bulgaria, Romania, Macedonia, Serbia, Kosovo, Hungary, Germany, Singapore, Malaysia and the United States. The group is entirely Bulgaria-owned and a major part of the products is developed and maintained by the local office. Consolidated results as of the end of September 2017 show net revenue of BGN 29.5 M (€ 15 М) and profit of BGN 1.1 М (€ 0.6 М).
LINK was founded 20 years ago in Norway and is listed on the Oslo stock exchange. The company has 340 employees worldwide and is Europe’s leading provider of B2C notifications and mobile services. For LINK, this is a second Bulgarian acquisition after Voicecom (you can read more about it in our October issue). The deal will provide a stable platform for LINK for the development and growth in the region through a strong focus on sales and innovation in mobile messaging and solutions. The CEO, Arild Hustad, says the region has significant growth potential and the company plans to increase its market share.
In a separate transaction, Terra Communications acquired 100% of Serbian EDS DOO (established in 2009 and engaged in the field of mobile services). The agreed price is € 500 and is equal to the book value of the shares. The acquisition is expected not to be subject to regulatory review, according to the preliminary analysis, and is expected to be completed by the end of April. The company commented the EDS transaction is not part of the commitments made by Allterco to LINK.
