After buying three Canadian companies last year, Calian Group decided to venture a little farther afield for its first acquisition of 2019.
The Ottawa-based professional services firm (TSX:CGY) has made its first-ever M&A foray into Europe, announcing this week it has acquired German satellite communications company SatService.
Under the terms of the all-cash deal, Calian will pay 6.45 million euros (C$9.6 million) up front for SatService. The purchase price also includes two additional payments over the next two years totalling up to $5 million, contingent on SatService hitting certain earnings targets.
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The company will be absorbed into Calian SED, Calian’s Saskatoon-based communications systems branch. SatService will continue to operate out of its German office, and founder Michael Ulbricht said in a news release he plans to stay on as managing director for the next few years to help grow the business.
SatService’s main markets are Austria, Germany and Switzerland. The company also serves customers in France and Great Britain.
Calian chief financial officer Patrick Houston said the acquisition gives the Ottawa firm a strong base from which to expand its foothold in Europe.
“We see it really as a launching pad for more growth,” he told OBJ.
Based in Steisslingen, Germany, SatService employs about 20 people and last year generated revenues of roughly $10 million. The 20-year-old company provides turnkey satellite solutions and also develops its own software and hardware systems for satellite installation, communications, switching and other services.
“Those products have a good reputation and carry higher margins,” Houston said. “That’s been one of our objectives with these acquisitions – bring in companies that have higher margin profiles that help bring up our corporate margins.”
Houston said Calian officials became familiar with SatService after meeting its executives at trade shows. After hitting it off with Ulbricht during several get-togethers in Germany, Calian CEO Kevin Ford decided to pull the trigger on the firm’s first acquisition of a foreign company.
“I think the fit was just there,” Houston said, noting the deal with open up Calian to new markets and service lines. “I think there’s going to be a good partnership there. Even though (Ulbricht) is selling the business, he still loves it and wants to see it succeed.”
This week’s deal appears to be a clear signal that Calian is going full speed ahead with its “five and five” strategy of growing five per cent a year through acquisitions and five per cent organically. Houston said the company, which employs more than 3,000 people across its operations, will continue to keep its eyes open for more potential M&A targets.
Calian recently stretched its streak of profitable quarters to 69 with net earnings of $3.3 million in the first three months of fiscal 2019, and the firm is projecting overall revenues of between $330 million and $360 million for the year.
Calian shares were up 24 cents to $33 in mid-morning trading on the Toronto Stock Exchange.
