THE £7.3m sale of spy gadgets firm Datong to Seven Technologies Holdings creates a £20m turnover company, which will be one of the strongest independent players in the sector, according to advisers involved in the deal.
Leeds-headquartered Datong put itself up for sale in February after a rocky time on the stock market. Last month, Seven made an offer at a price of 50p in cash for each Datong share. Yesterday, Seven declared its offer to buy Datong unconditional.
Cavendish Corporate Finance, which advised Datong on the sale, said that the combined business will have “an enhanced capability to develop next-generation solutions for its increasingly global client base”.
Seven Technologies Holdings is an engineering business specialising in the manufacture of communication applications for inhospitable environments. Its parent company is Northern Ireland-based Seven Technologies Ltd, which has been trading since 2005.
Last year YFM Equity Partners, a specialist SME fund manager with offices in Leeds, paid £6.6m to take a stake in Seven to help its growth and development. Datong, which has bases in the US and Malaysia, has for more than 30 years specialised in providing covert surveillance, tracking and location systems to defence, security and law enforcement agencies worldwide.
Cavendish said that the two businesses create “a larger and stronger group” within the specialist intelligence technology sector, which will benefit from additional scale and a wider customer base. It said it will also enable the company to tender for larger projects and cross-sell products from each group into the other’s markets as well as providing “a stronger platform” for further international expansion.
John Farrugia, who led the transaction for Cavendish Corporate Finance, said: “Global threats from terrorist and international crime organisations are constantly changing and this deal will help the enlarged group deliver enhanced intelligence solutions for its broad range of clients to address these evolving challenges and assist it in capitalising on the opportunities these trends present.
“The group’s products and systems are world-leading and are increasingly being used by defence and law enforcement agencies worldwide for their security and surveillance needs.
“The specialist intelligence technology sector is attracting attention from a wide range of potential buyers. Its fundamentals are supported by the escalating threats from criminal and terrorist groups faced by governments and security agencies. Leading businesses in this sector, with proven technology and systems, loyal clients and credible growth plans can command high multiples and strong exit prices.”
BDO, which has offices in Leeds, advised Seven on the deal.