Information on the Target

Co-native has enhanced its position as the preeminent public cloud specialist group in the Nordics through the strategic acquisition of Retune Group AB (“Retune”). Established in 2011, Retune is a Swedish cloud service provider that offers managed services and consultancy, primarily focused on the Microsoft 365 platform and secure digital workplace solutions. The company is headquartered in Stockholm, employs approximately 45 professionals, and reported revenues of around SEK 100 million in 2023, with a significant percentage derived from recurring revenue streams.

This acquisition allows Co-native to substantially bolster its expertise in Microsoft cloud solutions within Sweden. Retune brings specialized knowledge in areas such as Microsoft 365, digital workplace services, and cybersecurity. Additionally, it provides Co-native with a complementary customer base that includes mid-sized to enterprise clients, thereby enhancing the company's market presence in Stockholm. Following the acquisition, Retune will be integrated into Co-native’s existing subsidiary Asurgent, which focuses on Microsoft Azure and cybersecurity services, to maximize collaborative opportunities and deliver increased value to their customers. The current shareholders of Retune, including Sobro and CEO Farzad Aghazadeh, will become co-shareholders in Co-native as part of this deal.

Industry Overview in Sweden

The Swedish public cloud market has been experiencing robust growth, driven by a rising demand for cloud-based services and digital transformation initiatives among businesses. The market is characterized by a strong emphasis on cybersecurity, remote working solutions, and the adoption of collaboration tools, particularly in the wake of the COVID-19 pandemic. As firms increasingly transition to cloud environments, the need for specialized services like those offered by Retune has become essential for facilitating smooth transitions and ensuring data security.

Sweden's technology landscape is also notable for its innovation and a strong commitment to sustainability. Many organizations are prioritizing environmentally friendly practices, driving demand for cloud services that optimize resource usage and decrease carbon footprints. This trend is reinforced by the Swedish government's support for digital infrastructure developments, which is crucial for enhancing the economy’s resilience and productivity.

Moreover, the presence of a well-educated workforce and numerous technology-focused educational institutions contribute to Sweden’s competitive advantage in the cloud services industry. The country boasts a high level of digital literacy, resulting in a workforce well-prepared to leverage advanced technologies effectively. As a result, the demand for cloud solutions and associated services is expected to continue growing, creating lucrative opportunities for industry players like Co-native and Retune.

The Rationale Behind the Deal

Co-native's acquisition of Retune is strategically aimed at fortifying its position in the competitive cloud services market of Sweden. By expanding its capabilities in Microsoft 365 and digital workplace services, Co-native can better serve its clients with a wider range of solutions, thus meeting the evolving market demands. This merger not only enhances the depth of expertise available within the organization but also adds significant value to the offerings available to its customer base.

The integration of Retune with Asurgent is expected to foster collaboration, enabling both entities to streamline operations and jointly develop innovative services that cater to the needs of clients undergoing digital transformations. This strategic alignment aligns with the broader goal of optimizing resources and functionalities across Co-native's cloud services portfolio.

Information About the Investor

Co-native, which was established in 2022, has rapidly emerged as the leading public cloud specialist group in the Nordics. The company has successfully accelerated its revenue trajectory, achieving nearly a sixfold increase through strategic acquisitions and organic growth initiatives. Currently employing around 300 skilled professionals, Co-native anticipates projecting pro forma revenues of approximately SEK 600 million in 2024.

The experienced management team at Co-native is keen on pursuing further growth opportunities in the cloud services sector, emphasizing both organic growth and strategic acquisitions. The leadership transition that accompanies this acquisition underscores Co-native's commitment to ensuring that their integrated operations are efficient and effective in delivering value to its stakeholders.

View of Dealert

Dealert considers this acquisition to be a strategically sound investment for Co-native, reflecting an astute understanding of market dynamics and customer demands. By acquiring Retune, Co-native not only enhances its service offerings but also expands its market footprint, particularly in the critical Stockholm region. The alignment between Co-native and Retune's strengths in Microsoft 365 and digital workplace solutions positions them well to capitalize on the growing market for cloud services.

Furthermore, the integration of Retune into Asurgent creates significant synergies that could lead to improved operational efficiencies and a more robust value proposition for their clients. The combined expertise within the newly formed group is likely to stimulate innovation and the development of new, market-leading services in the cloud services space. Investors should view the potential for this acquisition positively, as it demonstrates Co-native's forward-thinking approach and ambition to remain at the forefront of the industry.

However, it is crucial for Co-native to successfully manage the integration process and maintain a strong company culture among the merged entities. Any misalignment in operational strategies or failure to assimilate Retune’s workforce could present risks to the anticipated benefits of the acquisition. Nevertheless, if managed effectively, this deal could pave the way for Co-native to achieve remarkable growth and success in the evolving public cloud market.

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