Redcentric says in talks for sale to Milan-listed Wiit

By Amy-Jo Crowley

LONDON (Reuters) -British IT services group Redcentric is in the early stages of talks over a sale of the company to Milan-listed Wiit SpA, it said on Friday.

The news followed a Reuters report that it was working with investment bank Lazard on an attempt to sell the company. Under takeover rules the bidder has now until June 21 to make a firm offer for Redcentric.

Italy's Wiit describes itself as a leading cloud and cybersecurity service provider. It has a market capitalisation of 485.7 million euros ($526.89 million).

Shares in Redcentric, whose clients include broadcaster Channel 4, Heathrow Airport and the National Health Service, were up 12.8% following the news in late trading. The company was valued at 214 million pounds at the close on May 23.

Redcentric's shares are up around 5.5% year to date before the news, and have largely traded in line with the broader London market for the past two years, according to LSEG data.

The company reported a jump in revenue to 141.7 million pounds last year from 93.3 million pounds a year earlier, partly driven by acquisitions including 4D Data Centres, Sungard Consultancy and Sungard Data Centres, according to its latest preliminary results.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 3% to 24.5 million pounds.

This is not the first time Redcentric has explored a formal sale process. It announced a sale process led by Stifel Financial Corp in 2020, although discussions with buyers did not materialise into any formal offers.

Speculation of a sale come amid increasing M&A activity in the IT services sector. Daisy Corporate Services earlier this month combined with Wavenet to create a 500 million pound company in terms of revenue. Private equity firm Hg last month made an investment in UK IT services provider Focus Group, valuing the business at $1 billion.

Redcentric provides public and private organisations with managed IT services including cybersecurity, communication and cloud computing. It was founded in 1997 and listed on the AIM market in 2013.

($1 = 0.7860 pounds)

($1 = 0.9214 euros)

(Reporting by Amy-Jo Crowley; Additional reporting by Alun John; Editing by Anousha Sakoui and Louise Heavens)