YFM's Seven to take Datong private

Ellie Pullen
19 June 2013

Tweet
Facebook
LinkedIn
Google plus
Send to

Seven Technologies, a portfolio company of YFM Equity Partners, has acquired AIM-listed intelligence equipment provider Datong for ТЃ7m.

Seven, a Northern Ireland-based engineering firm, acquired a 95% stake in the company, according to Datong – equivalent to slightly more than 13 million of the company's existing ordinary shares.

YFM provided Seven with £3.2m in fresh equity funding for the acquisition. Danske Bank supplied the company with a £3.6m loan to finance 60% of Seven's acquisition of Datong. Seven committed the remaining amount, approximately £200,000, from its own cash reserves for the takeover.

Seven plans to delist the business from the London Stock Exchange, as per an official application sent last week, and Datong's company shares are set to stop trading on 10 July.

An announcement released on Datong's website states that, effective immediately from Seven's unconditional offer of acquiring the business, Datong's non-executive directors – Paul Lever, Grant Ashley, Richard Brearley and Brian Smith – have resigned.

YFM originally acquired Seven, which saw revenues of £9.2m for 2011/12, for £6.6m last April. The firm invested via three separate funds: its Chandos Fund and two of its British Smaller Companies VCT vehicles.

Debt
Danske Bank provided a total of £5.6m in debt facilities, which comprised a £2m note earmarked for the refinancing of existing loan notes provided by YFM and a £3.6m loan to finance a portion of Seven's acquisition of Datong. Both facilities will mature in 2020 and the yearly interest rate for the notes has been agreed on a combined total of Libor + 2.85%.

Company
Datong was founded in 1974 and is based in Leeds, with operations in the US. The company employs 85 staff and recorded a turnover of £9.7m for 2012, as well as an operating loss of £30,000.

Datong provides technology equipment designed for covert intelligence gathering, as well as homeland security and law enforcement. Following Seven's acquisition, the newly combined businesses will have an aggregate turnover of approximately £20m.

People
Following the resignation of several of Datong's non-executive directors, only CEO Mark Cook and finance director Stephen Ayres remain on the company's board. Paul Cannings, a director at YFM, represented the firm on the deal. Richard Moon is the chairman of Seven.

Advisers
Acquirer – BDO, John Stephan, David Abbott, Susan Jarram (M&A); Osborne Clarke, Simon Jones, Mark Wesker (Legal); RSM Tenon, Lee Castledine, Alex Milne (Financial due diligence).