Exclusive: Panacea admits to Kelway talks

A deal may be close to fruition

Panacea Services has revealed it is in advanced talks with acquisitive VAR Kelway, but has stressed there will be no lay offs if a union goes ahead.

Peter Stroud, managing director of the London-based HP and VMware partner, said the pair had been exploring the possibility of joining forces for over two years, and that a deal may now be close to fruition.

“I think something will happen and that it will be quite soon,” he told CRN.

“Kelway is product-centric and we are majority services, so if a deal is done it will be beneficial to both parties,” he said.

"Because we are very strongly into managed services and virtualisation, Kelway sees those product sets as being fairly recession proof."

Stroud was quick to head off rumours that a deal would lead to heavy job cuts at the 100-strong firm.

“This is not a buyout as I will be going on Kelway’s board and the shareholders of Panacea will have share options in Kelway. No-one will be leaving the company,” he said.

Stroud also batted off rumours that Panacea was being forced to sell up because of financial difficulties.

He said the firm had just filed its accounts for the year to 31 March 2008, in which it banked a profit before tax and interest of £0.75m on sales of about £24.8m. Stroud said Panacea was on course to attain similar results in 2009.

It is 18 months since Kelway bought Elcom and the VAR has made no secret of its ambition to continue on the acquisition trail.

Kelway managing director Phil Doye told CRN: "We are looking at two or three companies seriously at the moment. We view the downturn as an opportunity to acquire businesses that will promote additional value to our customer base."