2e2 puts M&A plans on hold

Reseller admits further acquisitions are unlikely as it posts annual results

signing off: 2e2 doesn't intend to seek further acquisitions

Private equity backed reseller 2e2 has signalled it will wind down its acquisition spree, despite posting an increase in turnover and profits for 2008.

The VAR logged turnover from continuing operations of £194.6m in the 12 months to December, compared to £178m a year earlier. Recent purchase Netstore contributed £10.6m of the 2008 total but turnover still rose three per cent on an organic basis with the contribution of disposed arm Hamilton Rentals stripped out.

The bottom line also improved as operating profit from continuing operations rose from £10.3m to £11.5m.

2e2 had already made 13 acquisitions before it snapped up giant Oracle and HP partner Compel in 2007 for £53m.

It then followed this up with its £59m purchase of security integrator Netstore in October, but chief executive Terry Burt said the VAR’s acquisitive days are over for the time being.

“The acquisition of Netstore completed the group's service offering and so it is unlikely that we will be seeking further acquisitions in the near future. This will allow management to focus on optimising the business for the challenging market ahead,” he said.

Netstore drew about half of its revenues from the public sector and that vertical now generates 26 per cent of 2e2’s sales.

“The Netstore operations have already been integrated into our UK business and their staff and management have taken on some of the key roles in the management structure of the enlarged business,” added Burt.