Data Select is understood to be close to buying troubled distributor 20:20 Mobile in a deal that will see the second biggest UK handset distributor buy the biggest distributor.
The two companies were in advanced discussions as Mobile went to press, with insiders claiming that a deal would be finalised in the coming weeks.
The deal is understood to be a complete acquisition of the entire 20:20 business, including the handset and accessories divisions.
Peter Jones, CEO of Phones International, which is the parent company of Data Select, submitted a bid to the lenders of 20:20’s owner, Doughty Hanson, last week, which was believed to have been rejected.
Jones is understood to be keen to take advantage of the opportunity to buy the business with relationships strained between private equity firm Doughty and the banks that funded its £347m takeover in September 2006.
A source close to the deal said: ‘The investors want out and this is an ideal opportunity to seize on that.’
There has been growing disquiet from several members of the debt syndicate in recent months, with continued sliding profits, missed targets, and after 20:20 Mobile breached one of its banking covenants earlier this year.
Two weeks ago, 20:20 Mobile’s debt syndicate agreed to write-off £175m of debt hanging over the distributor by taking on a near 50% equity stake in the company. The move has reduced 20:20’s overall debt to around £90m.
Doughty Hanson agreed to inject £15m into 20:20, with the banks restoring a £30m credit facility, which they withdrew after the covenant breach, to help 20:20 with trading.
But Jones’ approach has taken bosses at the Crewe-based company by surprise, as well as at other distributors in the industry.
It is understood that some members of the debt syndicate are tempted to accept an offer from Jones, ending what has been a turbulent investment.
Last month, 20:20’s airtime business, Dextra, was off-loaded to rival distributor Fone Logistics for no fee but in an earn-out deal.
Peter Jones (above, left) and Phones International managing director George McPherson (above, right) declined to comment.