Cyan £12.6m deal covers acquisition of Swedish business
Cambridge wireless technology business Cyan is acquiring Swedish smart metering specialist Connode Holding AB for £6.8 million in a move that opens up growth opportunities with technology for the Internet of Things and smart cities.
The UK company will pay £4.3m cash and £2.5m in equity consideration out of a £10.1m placing. The £12.6m transaction value comprises the £10.1m placing and subscription and the £2.5m equity consideration.
With its HQ in Stockholm, Connode is a well-established supplier of wireless communication solutions for smart metering and the Internet of Things with customers in the UK, Europe and Asia.
Connode is also a key supplier of mesh technology to the UK Smart Metering Implementation Programme. The potential value of the SMIP rollout to Connode is approximately £37m in software licence and support fees over the rollout and support lifecycle.
Biggles Enterprises Limited, part of the J. S. Technical Services Company, Limited group of companies in Thailand, has agreed to make a strategic investment of £2m as part of the subscription.
As part of the fundraise, all the directors of Cyan are investing alongside certain senior managers and a consultant for a total of £304,500.
Directors and certain senior managers have also agreed that, in the interests of retaining cash within the company, they will receive all of their net income and bonuses earned during the period from July 2016 to June 2017 as shares issued at the issue price, which will represent an incremental equity investment of £729,904.
Connode offers Cyan a highly complementary product range with further growth opportunities to create the global number one narrowband mesh radio solution Internet of Things canopy provider.
Since 2006 utilities and telecom operators have deployed Connode-enabled devices in large-scale projects in Europe. As a result, the acquisition will open up new territories for Cyan in Europe and other western markets, including potentially North America.
Cyan executive chairman John Cronin (pictured) said: “As our clients in developing markets realise the benefits from our proprietary end-to-end solutions, we believe that they will want to converge their networks and this will require standards-based technologies.
“Convergent networks require a standards-based core language to enable the rapid development integration and consolidation of applications.
“The acquisition of Connode is transformational for Cyan and will give us the capability to build these functions into our core products, enabling us to future-proof our customer solutions and provide standards-based interfaces for additional connectivity as required for the Internet of Things and smart cities.”