UPDATE: Entropy, one of the country’s longest established IT security providers, has been acquired by Calyx for €4m in a combination cash and share deal. A further €950,000 will be paid if Entropy meets certain performance criteria over the next 12 months.
In a statement, AIM-listed Calyx said that the initial purchase price of €4m comprises €2.98m in cash and 1.06 million ordinary shares valued at €0.10 each.
Dublin-based Entropy was established in 1993 and provides a range of services associated with IT security including design, implementation, support and management. It has partnership agreements with many of the leading security hardware and software manufacturers including Microsoft, Nokia, Trend Micro, Websense, Check Point, IronPort and RSA Security.
The company’s client base covers all industry sectors such as retail, investment, pharmaceutical, leisure, transport and local authority. Its customers include Waterford Crystal, the Grafton Group, Zurich Capital Markets, United Drug and the Department of the Environment, Heritage and Local Government.
For 2005 Entropy had audited revenues of €6.25m with a pre-tax profit of €590,000. It had cash in the bank of €1.1m and net assets of €1.1m. Entropy’s Conall Lavery will continue as managing director of the new division and all of the company’s management are to remain in place for 12 months following the acquisition.
For much of the past few years Calyx has been steadily expanding in the market through a series of acquisitions, among them the IT maintenance provider Moss Technology which it bought in 2003.
Calyx purchased Vipertec of Carlow and Cork-based Bevcom a year later. Last year it acquired the communications specialist Convergent Systems, followed by QCL Systems. As part of an expansion into the UK it bought ITS Systems in October.
Calyx chief executive Maurice Healy said the latest acquisition of Entropy was the company’s largest to date and said it would enhance the company’s capability in the area of security solutions.
Entropy managing director Conall Lavery told siliconrepublic.com that he was “very happy that this is the right deal” for the company he had founded. Entropy had been seeking a buyer for the past number of months and had received several offers before deciding that Calyx offered the most suitable fit with its business.
Lavery said there was very little overlap between both companies’ customer bases and that Calyx’s strength in the small to medium business (SMB) sector would help Entropy to serve a new market segment. “While we are doing really well in our sector there’s huge potential that we are not addressing,” he said.
Industry estimates value the Irish IT security market at around €90m and the SMB sector comprises roughly half of this, Lavery noted. Calyx’s expertise in IT and communications means that the deal could also open opportunities to bid for contracts where security is just one part of a larger technology project, he added.
By Gordon Smith