29th Apr 2013. Telecom Corp of New Zealand (NZE:TEL, “Telecom”) has announced it has signed a conditional agreement to acquire 100% of the ordinary shares of privately-owned New Zealand IT infrastructure and data centre company Revera Limited for NZ$96.5m, including debt.
For the year ended 31 March 2013 Revera earned total revenues of approximately NZ$50m and EBITDA of NZ$13m. EBITDA is expected to grow by approximately 15% in the next 12 month period to around NZ$15m indicating an acquisition multiple of 6.43 times 2013 EBITDA. The deal will be funded by cash and Telecom’s existing borrowing facilities. The transaction is expected to settle in May 2013.
Telecom has indicated it will align its activity across its Gen-i subsidiary and Revera and that it will eliminate the duplication of resources across Revera & Gen-i (where non strategic) to achieve lowest total cost. It believes the combined Revera and Gen-i entity will be a much stronger and more diverse competitor in the market. The acquisition comes whilst Telecom is laying off up to 1,200 staff in a bid to strip out up to NZ$110 million in annual wage costs.
Revera was formed in 2002 when local managers of Hitachi Data Systems Roger Cockayne and Wayne Norrie bought a controlling 51% stake in the New Zealand operation. The business was renamed Hosting and Data centre Services (HdS) and substantially refocused on complex ICT infrastructure provision. In 2005 the management acquires the remaining shares of Hitachi Data Systems (HDS) and the company was renamed Revera. In 2010 the NZ CIO magazine listed Revera as a top-15 strategically important New Zealand IT company. Revera has 31 shareholders, with the Norrie and Cockayne families owning half the company.
The Revera brand will be retained and Revera will continue to run as a standalone business, providing the customers of Gen-i, Telecom’s ICT services division, with immediate access to additional Cloud capabilities and data centre capacity. Opportunities to collaborate across Gen-i and Revera will be actively explored in order to leverage our combined relationships across our respective client bases and target the best possible customer outcomes. The acquisition will add considerable momentum to the long-term growth strategies of Telecom and Revera, improving their capabilities, expanding their market reach and deepening the overall Telecom group offer. Telecom currently has 13 datacentres around the country and three new ones have been planned for Christchurch, Wellington and South Auckland. While the Christchurch facility was very close to completion and would be unaffected, Telecom has indicated that the Wellington and Auckland datacentres would be offered to Revera as it needed extra capacity in those areas.
Simon Moutter, Telecom Chief Executive, said, “We’re pleased to have a computing infrastructure company with the track-record and reputation of Revera joining our team and strengthening our group. As previously announced, Telecom is refining its business strategy to become a future-oriented, competitive provider of communication, entertainment and IT services delivered over its networks and the Cloud. This acquisition adds a respected brand that deepens our IT services portfolio for business customers, particularly with regards to Cloud services. Both Gen-i and Revera will be better positioned to respond to evolving customer needs in the areas of big data and cloud computing.”
Revera Chief Executive, Robin Cockayne, said, “Ten years ago Revera founders Roger Cockayne and Wayne Norrie put everything on the line to turn a fledgling hosting business into one of New Zealand’s leading computing infrastructure providers. I can think of no better endorsement of Roger and Wayne’s vision and the hard work and commitment of Revera staff than a company of Telecom’s importance staking a chunk of its future on Revera. Revera is one of a few cloud-focused infrastructure providers in New Zealand. This focus puts us at the sharp end of the utility IT services market. However, leading this market requires continued development of new data centres and services. We’ve enjoyed spectacular growth. But sustaining our momentum requires new investment and resources. This transaction ticks those boxes and helps Revera to build on its success so far.
Mr Cockayne added, “No single supplier carries all the necessary skills and resources that customers want. With owner Telecom, Revera will broaden its capabilities and as-a-service platform offerings, and will gain the benefits of Gen-i’s sales force selling for us to accelerate our growth. Gen-i’s strengths in mobility and unified communications and Revera’s cloud focus are complementary. Telecom has made it clear to us that Revera will continue to operate as a standalone business, serving and leading the market as we do today. Most importantly, Revera will retain its unique company culture and business philosophies. Revera will still be Revera and our customers should expect the same commitment to their immediate satisfaction and future goals”.
Gen-i Chief Executive, Tim Miles, said, “This is a fantastic move for Gen-i and for Revera, and more importantly, for our clients. The acquisition matches the future focus of Gen-i, giving us more data centre capacity, more Virtualisation expertise, and more horsepower to support clients. This is one of a number of steps being taken by Gen-i towards becoming more agile, cost-effective and responsive. This is all about ensuring we continue to deliver the services our clients need and want to enable their success. We’re refocusing around managed infrastructure services across IT and communications. This is a critical step in fast-tracking our growth and further centring our business on clients and what they most value. “Revera’s strengths totally complement Gen-i’s strengths. Gen-i is an established leading provider of managed infrastructure services from its network of high resiliency data centres, and is delivering new facilities in Christchurch and Auckland. Revera has led the market with its utility computing service offerings, and has additional data centre capacity in Wellington. “Both organisations are market leaders focussed on delivering innovation in the sector and value to our clients. While both Revera and Gen-i will benefit from this move, clients will be the big winners from our combined network of existing and Greenfield data centres and comprehensive suite of Cloud services offerings.”
Revera Limited is a leading New Zealand provider of computing infrastructure, data centre and platform services. Founded in 2002, Revera has around 140 staff and owns and operates five interconnected Type R data centres in Auckland, Hamilton Wellington (2), and Christchurch, delivering high-integrity utility computing, complex hosting, outsourcing, enterprise storage and data management services to New Zealand businesses, government agencies and technology partners.
In 2011 Revera were appointed cross-government Infrastructure-as-a-Service panel provider and currently manage large virtual computing environments and complex hosting for leading private sector and government organisations.
More than 200 New Zealand businesses rely on Revera for critical IT services and protection.
Telecom Corporation of New Zealand Limited (Telecom) is a supplier of telecommunications and information, communications and technology (ICT) services in New Zealand and Australia. Telecom provides a range of telecommunications and ICT products and services, including local, national, international and telephone services; mobile services, data, broadband and Internet services; information technology (IT) consulting, implementation and procurement, equipment sales, and installation services. The Company’s portfolio of IT services includes cloud computing services, managed IT services, IT outsourcing, IT software and hardware procurement, and professional services to assist organizations with business and technology investments.