A second extension to takeover talks between Daisy Group and a consortium led by CEO Matthew Riley indicates talks are ‘deadly serious’ between the two parties with a good chance of a deal being inked, according to a leading unified comms analyst.
Riley approached the Yorkshire-based firm’s board last month with a £470m bid to take the company private. The Daisy CEO and founder has the backing of a consortium that includes Toscafund Asset Management LLP – Daisy’s largest shareholder – and equity provider Penta Capital. The consortium already owns 51.5% of Daisy Group, with Riley holding a 23% share and Toscafund a stake of 28.5%.
The original deadline for the talks to conclude has been pushed back twice since then at the request of the consortium. The first extension granted by the Takeover Panel saw the deadline extended from 10 September to 22 September. The consortium then requested and was granted a further delay until 5pm on 6 October.
Philip Carse, Megabuyte principal analyst, told Mobile: ‘What this means is that the discussions are deadly serious and ongoing and sufficiently serious to persuade the Takeover Panel to extend the deadline.
‘These things are very rigorously policed by the panel, and so obviously there must be a very good reason for the consortium to request an extension. Obviously it is not a done deal yet but they are still talking and working it through. Although this is no guarantee of a deal, the deal is clearly still on the table.’
Industry players are watching the talks with interest. One leading unified comms CEO said: ‘I assume the delay means they are trying hard to put a deal together. It could be that the consortium are still doing due diligence on Daisy, or it could be that they are trying to raise money. It sounds to me like it is going to happen. They could be trying to do an acquisition at the same time with the money they are raising. That may explain the delay. They may be trying to align the business before taking it private.’
Toscafund’s holding in Phoenix IT and Penta Group’s ownership of Six Degrees have prompted analysts to speculate that the consortium could be planning to merge all three companies to create a major UK telecoms and IT company, although sources close to Six Degrees are adamant that a merger with Daisy Group is not on the cards. Phoenix is still considered to be a target. The company was unavailable for comment as Mobile went to press.
The talks follow rumours earlier this year that a Daisy/Phoenix IT merger was in the offing. Daisy was also in talks with Virgin Media owner Liberty Global earlier this year but failed to reach agreement. At the time, Daisy said it would consider strategic acquisitions as a way forward.