Kingston Buys Omnetica for £169M

Kingston Communications acquires Omnetica to expand its service offering to customers in the voice and data services market

November 30, 2004

4 Min Read

KINGSTON, U.K. -- Kingston Communications (HULL) PLC today announces that it has conditionally agreed to acquire Omnetica (the “Acquisition”) to expand Kingston’s service offering to customers in the voice and data services market, creating a leading provider of converged communications solutions in the UK.

Kingston will acquire Omnetica for a total consideration of £169 million to be satisfied by the payment of £99 million in cash (less any amounts applied by Kingston to repay debt in Omnetica existing at completion of the Acquisition (“Completion”)) and £70 million by the issue of 126,148,856 new ordinary shares1 in Kingston. The Seller is a company controlled by funds under the management of Kohlberg Kravis Roberts & Co. (“KKR”).


  • Omnetica is a leading provider of enterprise network solutions to customers in the mid to large enterprise segments, with particular strength in financial institutions, public sector and manufacturing.

  • Omnetica generated revenues of £208.7 million in the full year to 30 September 2004, with EBITDA2 of £20.9 million over the same period.

  • The Acquisition is consistent with Kingston’s strategy of maintaining a clear focus on customers, managing their communications needs and generating sustainable, profitable growth.

  • The Acquisition will combine Kingston’s capabilities in carrier and enterprise services with those of Omnetica in enterprise data and IP Networking, enhancing Kingston’s position in the evolving converged solutions market, broadening the businesses’ combined managed services proposition and its position in key vertical markets.

  • The Group as enlarged by the Acquisition (the “Enlarged Group”) will have a high quality combined blue-chip customer base.

  • The Acquisition will strengthen Kingston’s existing vendor relationships.

  • The board of directors of Kingston (the “Board”) believes the Acquisition will be both earnings3 and cash flow4 enhancing in the first full year of consolidation.

  • Upon Completion, KKR will (through its interests in the Seller’s Group) become a strategic shareholder in Kingston with an interest in approximately 24.6 per cent. of the share capital of the Company.

  • Peter Halls, Chief Executive of Omnetica and Johannes Huth, head of KKR’s European activities from January 2005, will join the Board as an executive director and non-executive director, respectively.

  • The Acquisition is conditional, inter alia, upon the approval of shareholders at an extraordinary general meeting (“EGM”) expected to be held on 20 December 2004 at 12.00 noon at the offices of J.P. Morgan plc at 60 Victoria Embankment, London EC4Y 0JP, and the admission of the new ordinary shares issued as part of the consideration to the Official List and to trading on the London Stock Exchange. A document comprising a circular to shareholders which provides information on Omnetica, details of the Acquisition, and listing particulars relating to the new ordinary shares to be issued, will be posted to shareholders. The circular will also include details on why the Board considers the Acquisition to be in the best interests of Kingston and shareholders as a whole and recommends that shareholders vote in favour of the resolution to be proposed at the EGM.

  • The Kingston upon Hull City Council (the “Council”) has irrevocably undertaken to vote in favour of the transaction in respect of its 41 per cent holding in the share capital of the Company. The Council has been advised by Deutsche Bank.

  • The Acquisition is expected to be completed by the end of December 2004.

Commenting on the Acquisition, Michael Abrahams, Chairman of Kingston, said:

“The acquisition of Omnetica is an excellent opportunity to acquire a company that fits perfectly with Kingston’s strategy of deepening our capabilities in servicing and managing the enterprise communications needs of our customers. In acquiring this high quality, profitable and cash generative business, we believe this transaction provides an opportunity to build real value for our shareholders in the years ahead. We are pleased to welcome KKR as a strategic investor to Kingston.”

Malcolm Fallen, Chief Executive of Kingston, commented:

“Omnetica is a successful business that is highly complementary with our own. In bringing together the respective customers and capabilities of both businesses, we will create one of the UK’s leading providers of converged communications services. Omnetica has an exceptionally strong reputation in its market and strong management team that will help us develop the business in the future.”

Johannes Huth, head of KKR’s European activities from January 2005, commented:

“Omnetica is a great strategic fit for Kingston. Bringing these two dynamic businesses together will offer a high quality, differentiated service proposition to the combined customer base. Our investment in the company demonstrates our confidence in the ability of Kingston to drive the combined business forward, and to maximise value for shareholders.”

Kingston Communications

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