Cancom buys Novosco to target bigger managed services deals
Cancom, one of Europe’s fastest growing infrastructure services vendors, has made a third acquisition in the UK in the space of just over a year.
The Munich-based company is paying £70m to buy Belfast-based public sector reseller and services firm Novosco, and Cancom CEO Thomas Volk told us that the move would help it build the scale it needs to more consistently challenge for large international managed services deals.
Volk, a former Dell EMEA boss, who took over as CEO at Cancom last year, said that despite the current Brexit-related volatility, the UK remains hugely attractive to Cancom, as businesses push ahead with essential digital transformation programmes. He cited Novosco’s £107m broad-scope contract with Cambridge University Hospitals (where it replaced the former HP Enterprise Services) as an example of the potential opportunities that are emerging in the target company’s core public sector market.
Cancom has more than 3,500 employees across Europe and the US. At a group level, revenue rose by 19% to €1.4bn in 2018 (including an impressive 12% organic growth), with EBITDA up 24% to €115m, equivalent to a margin of 8.3%.
The company splits its activities into two areas: Cloud Solutions (which includes its AHP cloud-based workplace management software, cloud equipment reselling and managed services), which accounted for 18% of last year’s revenue; and IT Solutions, which covers consulting, IT equipment reselling, and systems integration.
Volk said that the company’s evolution up the value chain from a pure reseller is partly due to its willingness to invest in research and development, and to work closely with its customers in developing new offerings that are relevant to the market. Following the purchase of Novosco, Volk said that the UK will be one market where it steps up its international push around the AHP platform.
The core of Cancom’s UK business is built around last year’s acquisition of OCSL and the Cisco partner Ocean Intelligent Communications and Volk said that Novosco will be integrated with the other two to form a single operation. Novosco, which brings 300 employees, was on track to hit an EBITDA margin of 17% on sales of £55m in fiscal 2019.