Daisy gobbles up Phoenix in £135m deal
Daisy says move 'likely to involve headcount reduction' at Phoenix IT Group
Daisy Group has announced today that its offer for Phoenix IT Group has been accepted, in a move it claims helps its ambition to become the "first truly converged IT and unified communications provider in the UK mid-market".
The firm said staff cuts were likely and that Phoenix directors would go.
News that Daisy had entered into talks with Phoenix, along with joint shareholder Toscafund Asset Management, was first announced last week, and now an agreement has been reached which values Phoenix at about £135m.
Matthew Riley (pictured below), Daisy's executive chairman, said the move was in line with his firm's plans to combine converged IT and unified comms.
"The addition of Phoenix's strengths in IT services and solutions, particularly its managed services and rapidly expanding cloud services, will further strengthen Daisy's existing portfolio of products and services that represent the converging world of traditional telecoms and IT," he said. "We believe the acquisition of Phoenix creates the unique opportunity to become the first truly converged IT and unified communications provider in the UK mid-market."
In a statement released today, Daisy said it intends to carry out a "detailed integration review of Phoenix's business in order to determine the best way to integrate Phoenix's and Daisy's businesses".
The statement said this review will lead to decisions "likely to involve headcount reduction" in areas of "overlapping corporate, commercial, operational and support functions".
Daisy claimed not to have any plans to change the location of the Northampton-based business, but did say it expects "each of the Phoenix directors will cease to be directors" once the deal is completed, which is expected to be in late July.
Phoenix has had a tumultuous few years, but Steve Vaughan, chief executive of Phoenix, said the acquisition demonstrates how it has moved to financial stability.
"Our three-phase plan for Phoenix has the potential to deliver long-term value to shareholders, but as with any plan it is not without risk," he said. "The Phoenix board believes that the premium implied by this offer, in cash, is a fair recognition of the potential upside in the plan, tempered by the inevitable execution uncertainty.
"We have worked hard to bring financial stability and strategic clarity to our group. Today's offer serves as clear recognition of those efforts and their success."
The acquisition is one of many Daisy has made in 2015, with it already buying comms VAR Damovo in January and Daisy Partner Services (part of Daisy Group) taking a slice of Calyx. Riley has previously indicated to CRN that acquisitions will be part of Daisy's strategy on its quest to become a £1bn-turnover company over the next five years.
In February Neil Muller, former UK managing director at Computacenter, moved over to Daisy as its new chief executive.
Muller said today the Phoenix move will boost Daisy's play in the enterprise space.
"It allows us to add to our capability and provide end-to-end solutions directly to our mid-market customers. Via our partner services business, we believe it will enable us to deliver further value to our partners who serve the enterprise market," he said.
Prior to Muller joining Daisy, the firm was privatised in January with investment from Toscafund along with Riley himself.