Calyx, the IEX-listed telecoms and IT supplier, has announced the acquisition of fellow IT group Mentec for €16 million. However, the company also warned that its results for this year would be "marginally below" expectations.

In a statement to the stock exchange, Calyx said trading at its UK division was behind expectations for the current year and that this, combined with an increased interest and depreciation charge, meant the results would lag expectations. The shares fell slightly, ending the day down 16 cent at €1.24 in Dublin, though dealers said investors were waiting for more details from the company about its outlook before deciding the full implications of the announcement. Volume was light.

Calyx also said it had successfully implemented its strategy of increasing the managed services proportion of its overall business and that, while this will cost money in the short term, in the long term it will increase the transparency of the business model and enhance the quality of the group's earnings.

Chief executive Maurice Healy welcomed this achievement and added that the acquisition will provide increased opportunities for cross-selling throughout the group, as well as the chance to provide more value-add services.

Calyx will pay an initial sum of €9.75 million in cash and €2.25 million worth of shares, with a further cash sum of €3 million and shares worth €1 million due in June. The cash is being financed through a €12 million extension of an existing loan facility.

Mentec, which is based in Dublin and Leicestershire, supplies technical and managed services to clients such as SWS and the Automobile Association in Ireland, and Group 4 Technology in the UK. It had turnover of €20.1 million in 2005, with Ebitda of €1.5 million and net assets, excluding goodwill of €1.1 million.