US distribution giant Brightstar’s protracted takeover of 20:20 Mobile will finally go ahead at the end of March, after negotiations dragged into a fourth month.
A senior source said the acquisition was in its final stages, amid growing industry speculation that the sale had been called off. He told Mobile: ‘It is not true that the sale is off. It is definitely going through. We are in the last weeks of negotiations. A number of hurdles have been cleared and I am more confident than ever it will go through by the end of the month.’
The source said the protracted negotiations had centred over disagreements over the value of the company and its assets with both parties ‘going backwards and forwards trying to get the right price’.
Industry observers said negotiations would be intense between the two parties, with 20:20 Mobile’s major shareholder Doughty Hanson expected to leverage Brightstar’s clear desire to gain a foothold in the UK distribution market. This is Brightstar’s second attempt to buy a UK distributor after it failed to buy Data Select in 2010, following drawn out negotiations.
The source said the impasse was unrelated to 20:20 Mobile losing its second major distribution contract with Phones 4u Group. The LSG contract was awarded to TMT First, after Phones 4u’s insurance arm compared the two businesses. A spokesman told Mobile: ‘LSG reviewed its supply chain partners and in a benchmarking exercise TMT outperformed 20:20 Mobile in terms of delivering better unit sales from customers in terms of quality.’
The contract, which LSG described as ‘significant’, sees TMT First provide warehousing and quality control of replacement handsets and unit handling and dispatch services for LSG’s mobile phone insurance schemes, which cover more than nine million customers via banks and mobile operators.
20:20 Mobile had been awarded a one-year extension to Phones 4u’s logistics contract in May last year, after having delivered Phones 4u’s logistics contract since the retail chain launched. However, it has since emerged that the retailer will end this contract with 20:20 this year, with Tech Data Mobile taking over in a three-year deal from May. The contract includes a variety of distribution functions, including warehousing and reverse logistics.
A Phones 4u spokeswoman said it had conducted an ‘extensive tender process’ for the contract, which included pitches from 20:20 Mobile and others. She said Tech Data Mobile scored the highest on a set of criteria, compared to rivals.
20:20 Mobile declined to comment.
Author: Carol Millett