Some consolidation is afoot in the world of enterprise cloud services in Europe: Claranet, a managed service provider, is paying $88 million (£55 million) to acquire Star, a provider of cloud-based managed technology services. The move is a sign of how, while enterprise cloud services continue to grow in popularity, there is an increasing move to better service margins through scale and value-added services. Claranet says the deal will make it the largest provider of integrated hosting and network services to the mid market in the UK and continental Europe, with some 4,500 customers on its books.
This is the second big exit for founders Ben and Jos White. The pair were also the founders of MessageLabs, which got sold to Symantec in 2008 for $695 million.
As part of the deal, STH Limited, of which Star Technology Services is a subsidiary, will become part of Claranet.
This is a consolidation move to build up Claranet’s service portfolio, as well as to pick up more customers. Star’s main business is in the UK, while Claranet is pan-European. Star’s customers include Airbus, Amnesty International, Care UK, Channel 5, IRIS and De Vere Hotels.
“From a market and customer perspective, this is a great opportunity to bring together the experience and resources of two great companies to deliver a broader service portfolio to benefit our customers. It’s our mission to help our customers make the most of Internet-enabled technology, and the acquisition of Star will enable us to continue to deliver on this promise,” said Charles Nasser, CEO and Founder of the Claranet Group, in a statement.
Claranet says the combined company will have revenues of over £120 million, and it will have 700 staff across the UK, France, Germany, the Netherlands, Spain and Portugal.
Services in the combined group will include managed hosting and network services, Infrastructure-as-a-Service (IaaS) offerings, virtual data centers and managed application hosting services. Star brings business in unified communications, combining mobile and desktop services, as well as security services.
But scale will also play a role: “In addition, Star’s customers will be able to take advantage of Claranet’s European operations and benefit from the knowledge that the enlarged company is on a strong financial footing, with far greater purchasing power in the market,” says the release.
Notion Capital, a VC set up by Stephen Chandler with Ben and Jos White, acquired Star for £20 million in 2007 and then rolled it into its first investment fund. Notion says that the sale to Claranet represents a return on equity of over 12 times in the company – but it is not revealing the actual amount of equity invested. The 2007 deal was mainly financed through debt with a smaller equity component, TechCrunch understands.