Esprinet Acquires GTI
Italian broadliner Esprinet has signed a binding agreement for the acquisition of 100% of the capital of Spanish multispecialist GTI Software y Networking. The structure of the transaction envisages that the acquisition will be carried out through the sub-holding for Spanish operations, Esprinet Iberica SLU.
The GTI Group is the number-one distributor of value-added reseller and system integrator cloud software and solutions in Spain and sixth in absolute terms of revenues. Established in 1985, GTI is based in Madrid and is also active in Portugal and North Africa. With over 170 employees and a portfolio of 5500 customers, GTI is an official partner to more than 90 world-class suppliers including Adobe, IBM, Microsoft, Red Hat, Veeam, Veritas, VMware and Zebra-Motorola.
Since 2017, GTI has gradually abandoned the distribution of hardware products to the retail channel to focus on the business reseller channel to which it offers a range of value-added software solutions both under license and in"pay-per-use" mode. In the six months ended 31 March 2020, the sale of hardware accounts for only 30% of total sales and is mainly represented by high value-added hardware products in the automatic identification and data capture segments in which GTI is the market leader in Spain. In the year ended 30 September 2019, sales of SaaS cloud solutions amounted to €62.4m (34% of the total), up sharply from the previous year (+45%). Sales of "on-premise" software amounted to €52.9 (29% of the total).
GTI's business model has several peculiar features, largely resulting from the readjustment of activities towards business software solutions and cloud services: recurring and consistent sales thanks to subscription plans, high scalability guaranteed by the provisioning platform, with which customers define offers online for their customers and a favourable working cycle compared to traditional business thanks to the absence of inventories.
The transaction is consistent with the Esprinet Group's strategy of consolidating its leadership in southern Europe, particularly in the advanced solutions segment, and establishing itself as a key player in the Software as a Service (SaaS) and Infrastructure as a Service (IaaS) segments, in line with the progressive affirmation of a pay-per-use technology sales model compared to the traditional transactional method.
According to Context/IDC estimates, the European public cloud and related services market stood at €38,6B in 2019 and is expected to grow to €83,7B in 2023 thanks to a CAGR of +22%. The weight of Italy and Spain together, in a market mainly represented by SaaS solutions, is approximately 11%.
In the six months ended 31 March 2020, the GTI Group reported revenues of €91m and EBITDA of €1,9m (2,1% EBITDA margin). For the full year ended 30 September 2019, adjusted EBITDA amounted to €3,4m out of total revenues of €179,9m. Net financial indebtedness at 31 March 2020 amounted to €9,8m (€17,6m at 30 September 2019).
The total consideration for the acquisition of 100% of the shareholding is €33,8m and will be paid on a cash basis at closing using available resources. The execution of the agreement is subject to the necessary anti-trust authorisation in countries affected by the concentration and is estimated to take place by 30 September 2020.
Alessandro Cattani, CEO of Esprinet, commented: "with the GTI Group acquisition we significantly strengthen our presence in Southern Europe by becoming the second largest player in the advanced solutions segment in both Italy and Spain and increasing ou 2019 pro-forma sales in the advanced solutions segment to approximately €750m. The transaction has a formidable strategic value: it strengthens us in a segment with high profitability, allows fr a major leap in quality in the software segment in Spain and is a milestone in our development path towards the sale of multi-cloud solutions. With the entry into the Group of the highly specialised GTI team, we enrich our expertise in the management of as a service distribution platforms by integrating replicable best-practices in relation to our customers in Spain and Italy."