Shares in marketing group Next Fifteen Communications (NFC:AIM) fell 1.6% to £11.65 following confirmation that it is in discussions to buy rival Engine UK. This is consistent with the group’s long standing buy and build strategy.
It was widely mooted last year that Lake Capital (the owners of Engine Group) were considering the sale of the UK segment of the company for approximately £100 million. The company works with brands including Santander and Sky.
Lake Capital Partners is a private equity firm, focused on growth capital and buyout investments in lower mid-market companies across a range of service business.
STRONG BUSINESS MOMENTUM
At the end of January Next Fifteen Communications upgraded expectations for the year to 31 January 2022 after a strong fourth quarter performance.
Next Fifteen expects to post 34% year-on-year revenue growth for the three months to the end of January with organic revenue growth of 24%.
This underpins the guidance for the full-year outcome to be ‘ahead of expectations’.
The company is seeing strength across all of its divisions.
Customer Delivery and Business Transformation continue to deliver the fastest growth according to the company, while the Customer Insight and Customer Engagement units have recovered from Covid-affected performances.
The full year results themselves will be unveiled on 5 April 2022.
SHARE SALE TO FUND THE DEAL
According to Peel Hunt estimates Next fifteen will have £30 million of net cash at the end of 2022, and earnings before interest, taxes, depreciation, and amortisation of £90 million.
Applying a two-times leverage range would give the company scope for £210 million for further acquisitions. However, it is widely believed the company is intending to issue shares to part fund the deal, which is line with management’s preference to keep leverage low.
