Daisy Communications is to become an AIM listed business following the £200m reverse takeover of Freedom4 Group. Daisy is being bought by Freedom4 Group for £81m. At the same time, Freedom4 is also acquiring another business, Vialtus, for £42m. Freedom4 is also proposing to raise £83m by way of a share placing. The takeover is conditional upon Freedom4 shareholder approval.

The merged business will provide a range of telecommunication services to the business sector. The combined group, which will be called Daisy Group PLC, will be led by Matthew Riley, Daisy's current Chief Executive Officer.

Following completion, the Group's market capitalisation will be approximately £204.4m and intends to provide its SME and mid-market customers with a converged product set including access, hosting, voice, mobile and managed services.

Riley said, "Over the last eight years, Daisy has grown to be a substantial provider of cost effective communications services, with over 30,000 SME customers. With 24 acquisitions during this time, the management at Daisy has honed its consolidation and integration skills, maintaining customer service levels and creating a truly scalable operational platform.

"Daisy and Vialtus are two highly synergistic businesses; we believe that together they will be able to provide SME and mid-market customers with an effective and attractive one-stop-shop offer, and provide us with the solid foundations for our plans for future growth."

Peter Dubens, Non-Executive Chairman of Freedom4 Group plc, added: "We are seeing an opportunity in the UK telecoms services market at the moment where the fragmented nature and depressed valuations in the sector create conditions which are well-suited for generating value through consolidation. Our experience in making carefully chosen acquisitions and integrating them properly gives us confidence in our ability to generate further value for our shareholders. One of the major strengths of Daisy is the unified brand and operating system which will be key to the Group's future success."

Summary of the Transactions

• Acquisition of the entire issued capital of Daisy for £30 million in cash and the issue to Daisy Vendor and Optionholders of 63,750,000 Consolidated Ordinary Shares (see below), valued at £51.0 million

• Acquisition of entire issued capital of Vialtus for £13 million in cash and the issue of 36,250,000 Consolidated Ordinary Shares, valued at £29 million

• A proposed Placing by Freedom4 Group to raise up to £83 million (before expenses) through the issue of Placing Shares to provide funding for the Acquisitions and for possible future acquisitions

• Proposed share consolidation on the basis of 1 Consolidated Ordinary Share of 2.0p each for every 20 Unconsolidated Ordinary Shares of 0.1p

• Under AIM rules, the Acquisitions constitute a Reverse Takeover of the Company and are therefore subject to shareholder approval

• Hard irrevocable undertakings have been received from 32% of the shareholder base

• Liberum Capital Ltd is acting as nominated adviser and broker to the Company

Strategic Rationale
• The fragmented nature of UK SME and mid-market telecommunications market with its current depressed valuations, present significant opportunities for the new, enlarged group

• The strategy of the Enlarged Group is to create, through a combination of further acquisitions and organic growth, one of the largest UK providers to the SME and mid-market of telecommunications services and solutions

• Daisy and Vialtus will provide the right platform for potential further growth through a combination of consolidation and integration expertise, critical mass, customer scale, broad product offering and strong operational capability

• The senior management team have significant experience of creating shareholder value in the telecoms sector through both organic and acquisitive growth