The remainder of the existing Redstone business will operate under the new name of Castleton Technology plc and following the disposal will be a technology company engaged in software support and consultancy. The Redstone brand, a valuable asset built up over many years, will transfer to Coms plc who will put the deal to their shareholders on 21 November.
Founded in 1995, Redstone has grown to an over £30 million annual revenue base with 300 staff. In the year ended 31 March 2013, Redstone reported turnover of £30.8 million and EBITDA of £2.5 million. Redstone has a list of blue chip clients and partners including Cisco, IBM and HP, and Coms has identified potential for growth in new markets and industries for the enlarged Coms Group.
Ian Smith, Chief Executive of Redstone commented: "The Disposal marks the end of a restructuring phase that begun on my appointment in 2010. We believe that the Disposal offers a fair price for our shareholders while offering Coms an opportunity to build upon the restructuring work completed under our management. I would like to take the opportunity to thank the employees of the Redstone ICT Business for their contribution to helping to build a profitable, cash generative business that attracted interest from a number of parties in recent months.”
David Breith, Chief executive of Coms added: “I am delighted that Coms is acquiring the Redstone ICT Business; it is a quality operator with a well recognised brand and a blue chip client base to which Coms can seek to leverage and cross-sell its broader suite of services. This will be the 7th acquisition since I became Chief Executive of Coms and I am pleased to report that we are well on our way to delivering our strategy of becoming a full service communications and ICT business.”
Breith added, “This acquisition is earnings enhancing and provides us with the scale we need to further build the Coms group of companies. It provides us with a significant increase in income generation to fund the enlarged business and also establishes a sound infrastructure, which allows the Coms group to provide an integrated service for our customers from “telecoms connectivity through to telecoms solutions”. Whilst Redstone will operate as a subsidiary of Coms plc we have identified significant commercial synergies and cost savings that can be achieved by bringing these two businesses together under the Coms umbrella. As a result we will achieve a significant uplift in gross profit, access to European markets currently served by Redstone and a significant ‘value add’ to customers of both businesses. This acquisition fundamentally changes the dynamics of our business and positions us for the next phase of growth.”