2e2 issues war cry to market giants

Integrator claims Morse acquisition will allow it to compete for bigger deals

Norris: When competitors buy each other it usually works out well for us

Integrator 2e2 has claimed that its proposed £70m acquisition of Morse will allow it to outgun the likes of EDS at the very top end of the market.

Morse’s management had been touting the London-listed firm since last summer and last week unanimously recommended 2e2’s 51p-a-share offer. Morse’s largest shareholder, Gart­more, has also backed the deal making counter-bids less likely.

2e2 corporate business development director Nick Grossman said that the
deal would expand 2e2’s share of its addressable market to two per cent, compared with market leader EDS’s eight per cent.

“This opens up more opportunities for us,” he said. “If we become a £400m business, people will become comfortable placing larger projects with us. They do not give you more than five to ten per cent of your turnover as they see it as undue risk.”

Grossman also dismissed the “standard market view” of Morse as a tin shifter, stressing the enlarged firm would still draw 61 per cent of sales from services.

“Morse has high-end tech­nical skills for long-term assignments,” he said. “2e2 cannot take on big projects in isolation because we simply do not have the people. This deal gives us the workforce to be able to offer that to our customers.”

Mike Norris, chief executive of Computacenter, welcomed the deal. “When competitors buy each other it usually works out well for us,” he said. “Some of the business will come out in the market so we can pick it up and don’t have to pay for any of it.”

Simon Aron, managing director of managed services specialist Eurodata, was concerned the recent shopping sprees of 2e2 and Kelway could leave smaller players marginalised.

“Consolidation does worry me, but they do seem to spend a significant amount of time integrating these companies rather than winning business,” said Aron.