The expected break-up of Calyx Managed Services has started, with the maintenance and carrier services divisions offloaded to Daisy Group and Chess Ltd respectively for a total of £5.5m in cash.
It always seemed inevitable that Calyx MS would be carved up and sold off when private equity fund MXC Capital paid £9m to buy the troubled operation in January; it has a track record of doing similar deals.
More ReadingSix Degrees separates: Sold to Charlesbank Capital PartnersWanna buy a software reseller? Comparex big enough for you?Gobblefest on horizon for managed services pairCSC picks up the axe yet again, eyes 800 staffers' quivering necksLife after Lord Shugs looks good, as Viglen directors' packages swell
London-listed MXC today confirmed that “following a strategic review” it has entered into a conditional agreement to “dispose” of the units.
The break-fix division — hardware replacements and support services — will become part of Daisy’s Partner Services Trading subsidiary. Daisy coughed up £3.75m (subject to an adjustment linked to deferred income and costs). In calendar 2014, the unit turned over £5.7m and made a gross profit of £3.7m. It had £722k worth of gross assets.
The telco services arm — line rental, carrier pre-selection and data circuits sold to end-user organisations and to trade customers — was acquired by Chess for £1.8m. The carrier business had a turnover of £7.4m last year, and made a gross profit of £2m.
Philip Carse, partner and principal analyst at Megabuyte, said the “sold pieces” are likely “sub scale” as standalone operations but will nestle well in the larger bosoms of Daisy and Chess.
This leaves MCX with the core managed network services element at Calyx, which also sells professional and infrastructure services. It made a gross profit of £5.1m on sales of £9.1m in 2014.
However, we suspect that an owner for this managed services business may also be sought, if one has not already been found.
MXC has executed similar strategies for numerous troubled tech firms including Redstone, Maxima and Anix Group. All were broken up, with parts that were deemed non core either closed or sold off.
This latest upheaval will not be welcomed by Calyx staff but it could just be that they find themselves part of a wider organisation that has a plan to build a better, more profitable future.
Clearly, Better Capital, the former owner of Calyx who sold it to MXC, will be watching developments closely to see how much cash can be shaken from this particular money tree. ®