Pipex owner nets £55m from sale to GX Networks

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The Independent Online

David Rickards, the owner of the internet service provider business Pipex, was yesterday celebrating the prospect of a £50m cash windfall after agreeing to sell his company to GX Networks.

It is the second time in just over a month the telecoms company GX Networks, headed by Peter Dubens, 37, has made a fortune for a businessman through an acquisition.

In August, it was the turn of Dominic Marrocco, founder of Firstnet Services which GX Networks bought for £4.3m.

Unlike Mr Marrocco, Mr Rickards, who is also 37, has agreed to carry on working and will take up an executive position on GX Networks' board once the deal has completed.

Mr Rickards, whose background lies in finance and accounting, bought Pipex from the American telecoms company Worldcom just under two years ago for an undisclosed sum.

He said yesterday that the company "needed an alliance with a larger organisation" to take its business to the next stage. "GX, with its highly resilient network presence and a culture similar to ours, is the right choice for Pipex."

GX Networks, which provides telecoms services to small and medium-sized enterprises, said yesterday it had agreed to pay £55m for Pipex, comprising £50m of cash and £5m in shares.

It is financing the cash element of the deal, which is subject to shareholder approval, through a combination of a share placing of nearly £28m, a new £15m debt facility and from existing resources.

The company also plans to change its name to Pipex Communications as it believes the Pipex brand holds more sway in the market.

Pipex, which is based in Welwyn Garden City and which has a workforce of about 90, is profitable and has 119,000 customers, including small businesses and residential users. In the year to 31 May, Pipex made a pre-tax profit of £10.1m on sales of £31.6m.

The deal boosts GX Networks' total number of customers to around 140,000, up from around 600 a year ago and gives it a foothold in the broadband market. It estimates it has about a 6 per cent share of broadband connections.

Following the deal, GX Networks will have net debt of around £2m since Pipex has a £20m cash pile.