2e2 confirms it will drop Morse brand

Morse name to go in the UK but mass job cuts are out of the question

Nick Grossman: This is really not a cost out

2e2 will waste no time ditching one of the UK channel’s most recognisable brand names should its £70m bid for Morse succeed.

The private equity-backed integrator yesterday tabled a 51 pence a share offer for London-listed Morse, with the deal set to close on 24 June if no rival bidders emerge.

Under the terms of the agreement - which will create a £400m resell-integrator powerhouse - Hutton Collins Capital Partners will take a 25 per cent stake in the enlarged company. 2e2 management and Duke Street Capital will see their stakes diluted.

Talking to ChannelWeb, 2e2 corporate business development director Nick Grossman, said 2e2 wanted Morse for its SAP and flexible resourcing skills, making mass redundancies out of the question.

But he admitted the Morse brand name would disappear “reasonably quickly” in the UK and that 2e2 would strip out duplicate costs in the boardroom and where the duo have neighbouring offices in central London and near Heathrow.

“That aside very few people [cuts] or actions are in contemplation – this is really not a cost out,” he said.

The Morse name will remain in Spain and Ireland, where Grossman said 2e2 has no traction.

Grossman said Morse’s heritage in the City would complement 2e2’s strength in the technology/media/telecoms and public sectors and that these three verticals would generate 65 per cent of the enlarged group’s sales. From a vendor perspective, the deal would expand 2e2’s position with HP and Sun.

“With literally a handful of exceptions Morse’s customers are new customers to us,” Grossman said.

Historically, Morse’s brand was up there with the likes of Computacenter and SCC but Rob Campbell, managing director of VAR Kavanagh, said 2e2’s decision to ditch it was not a shock.

“Morse lost its identity and if 2e2 can integrate it properly and make something of it, then great,” he said. “The brand has no value left.”

Although a few other big names, thought to include SCC, Xploite and Computacenter, sniffed around Morse in recent months, Grossman was confident 2e2’s 51 pence per share offer would secure the deal.

He stressed that previous bids, including a 25 pence a share offer from a mystery suitor last summer, had been at much lower prices.

“You have to move quite quickly, be determined and bid at a high enough price,” Grossman said. “If you look at the irrevocables, the largest shareholders have said they will only support our deal if they get more than [a 60 pence offer]. This is strong sentiment they want this deal and hopefully this will give us some security.”

Paul Barlow, managing director of VAR Servium, said 2e2 could draw on its experience of integrating a string of more than ten acquisitions earlier this decade, including Oracle and HP VAR Compel.

“This is going to create a strong organisation," said Barlow. "One of the challenges 2e2 will face is how to integrate the two cultures into one but then it has some experience in doing this."