Daisy Group plc (DAY)
Daisy acquires Outsourcery’s Vodafone mobile business
Daisy Group plc | Download | Published on 31/03/2011Daisy Group has followed up its recent O-Bit acquisition with the acquisition of Outsourcery’s Vodafone mobile business for £12m, or 4.6x EBITDA pre and 4.3x EBITDA post cost synergies. The deal will establish Daisy as Vodafone UK’s biggest managed service provider and adds significant scale to Daisy’s existing mobile business. We have updated our forecasts for net debt for FY11, updated FY12 and introduced new FY13 forecasts. Following recent share price weakness, Daisy's shares sit well below our 120p cash flow-driven valuation, yet with an estimated £40m+ of its bank facility still untapped and with plenty of accretive acquisition opportunities still available (as demonstrated by today's acquisition), Daisy's buy and build strategy continues to drive value. At 4.9x FY12 EBITDA and with a cash flow yield of 14.4%, Daisy shares remain significantly undervalued.
