Close the Loop Acquires Sustainable IT Distributor ISP Tek Services

Close the Loop is acquiring technology distributor, sustainable IT and circular economy specialist ISP Tek Services for up to US$66 million (A$99.7m), the companies disclosed.

ISP Tek Services revenue was US$49 million and NPAT (Net Profits After Tax) was $13.7 million for the trailing 12 months through October 2012. The deal's potential valuation -- pending various earn-out achievements -- is roughly 4.8 times that annual NPAT figure, according to Sustainability Partner calculations.

Related: See all M&A deals involving ESG and sustainability consulting, technology & software firms here.

Close the Loop Buys ISP Tek Services: Circular Economy Meets IT Product Recovery, Re-Use

Close the Loop, based in Somerton, Australia, also has locations in New Zealand, the United States and Europe. The company, founded in 2002, has evolved from toner cartridge recycling capabilities to expansive sustainability solutions. Key areas of expertise include zero waste recycling, asset management, collection & customer service, material recovery, logistics support, and sustainability program design.

ISP Tek Services, based in Southlake, Texas, manages and sells refurbished products that come from customer returns and cancelled orders; overstocks; and demonstration systems. The company's mission is "to encourage, promote, and work together to create a common approach and process on supply chain sustainability." And to "strive to embed sustainability into companies’ procurement processes through our industry."

With that mission in mind, ISP Tek Services restores PCs, notebooks, printers, servers, monitors and accessories to their original condition and performance. Each unit is fully tested, any broken or defective parts identified in testing are replaced and unit is tested again. Units are then cleaned, re-packaged and assigned to new refurbished part number, ISP Tek Services noted.

ISP Tek Services: Business Metrics, Tech Partners & Founders

Among the business metrics to note: ISP Tek Services has refurbished 568,000 printers and 193,000 laptops -- diverting 8.6 million pounds of waste away from landfills, according to the company's website.

Key ISP Tek Services partners include Acer, Apple, Cisco Systems, Dell, Hewlett Packard Enterprise (HPE), HP Inc., Intel, Juniper, Lenovo and Microsoft. The company also refurbishes equipment from Samsung and LG, among others.

ISP Tek Services founders, Sammy and Dania Saloum, have over 30 years of industry experience in consumer electronics and the returns lifecycle management space, working with Fortune 500 companies across the United States, the buyer said.

Looking ahead, the Saloum's will become "substantial shareholders" of Close the Loop while they continue to manage and scale ISP Tek Services globally, the buyer said. The specific ownership stake details were not disclosed.

Close the Loop Acquires ISP Tek Services: Executive Perspectives

In a prepared statement about the deal, Close the Loop Group CEO Joe Foster said: “The acquisition of ISP Tek Services delivers on our strategy of focusing on resource recovery, particularly in the world’s largest capital market, North America. This acquisition is expected to deliver approximately 100% earnings per share accretion to the Group on a historical annualized basis. ISP Tek Services is a Tier 1 full consumer electronics life-cycle management business with a keen focus to provide US-based remanufacturing capabilities for market-leading OEMs, which provides the Group with significant opportunities to expand in further regions around the world. We do not, however, expect to make any further acquisitions in the near future due to our already strong global foothold on the circular economy.”

Concluded Sammy Saloum, founder and CEO of ISP Tek Services: “We are excited about the opportunities that the combined Group can deliver in the remanufacturing space globally. With our complimentary service offerings, the Group can provide Tier 1 manufacturers with a responsible and secure end-to-end solution to manage their product lifecycles closer to home. Considering the chances of supply-chain instability and due to the sensitivity of data security of enterprise, corporate and consumer devices, bringing returns refurbishment closer to the original point of sale is a high priority for OEMs. The combined service offering allows the Tier 1 manufacturers to deliver on their circularity pledge and remanufacturing targets.”