Manchester-based network services provider Metronet has snapped up infrastructure and hosting firm M247 for £47.5m.
The combined business will have three data centres, over 200 staff, a combined turnover of more than £40m, and earnings before interest, taxes, depreciation and amortisation (EBITDA) of £12m.
It means the ISP biz will add connectivity and content services to its existing wireless network services as well as data centres across the UK and Europe.
Martin Courtney, analyst at TechMarketView, said Metronet's move to beef up the hosting side of its biz is a sound strategy.
He said providing network connectivity alone is unlikely to help it grow revenue "given the intensity of competition in the UK market from Alternative Networks, BT, CityFibre, Redcentric, Virgin Media Business and others, many of which are also looking to beef up their cloud hosting capabilities."
Metronet was set up in 2003 and combines wireless and wired technology, the biz employs 150 people across two sites in Manchester, last year it turned over £21.5m in cash.
Private equity firm Livingbridge invested in Metronet in June 2014 as part of a £45m secondary buyout of the firm. The biz said the acquisition of M247 is the first step in a targeted buy-and-build strategy.
Manchester-based M247 was founded by two internet engineers in May 2000 as Open Hosting, and renamed to M247 in 2008.
Philip Carse, analyst at Megabuyte, noted that for the full-year M247 expects revenues to increase 45 per cent to £10m, while EBITDA should double to £4m.
He said: "This is clearly a transformative and quite bold move for Metronet, doubling in size at a stroke, and showing that even the most successful of businesses need to continuously adapt their strategies."
He added: "The size of the acquisition is clearly substantial and will present challenges for a business that has grown organically, though both are near neighbours and have already worked together, which should help mitigate the risk." ®