September 2010 Archives

The decision by 2e2 management to keep its SAP services business under the Diagonal brand and in a standalone unit has led to industry talk that it may be sold.

This week the integration of Morse into 2e2 became clearer as did the roles that the senior business leaders in the group have taken up.

However, it is interesting to note that while the Solutions unit will be integrated into 2e2's Business applications division, the SAP Consulting element under GM Philip Donetti will remain branded under Diagonal.

"I would not be surprised if Consulting was sold either via an MBO or to another business, that is possibly the thinking behind why 2e2 is keeping the brand and the operation separate," suggested one company insider.

Of course there is always a potential alternative; the decision could be a nod from 2e2 management to the previous experiences of Morse's management when they killed off the brand only to resurrect it at a later date.

The Diagonal brand has resonated with customers and has some cachet left in it, whether as part of the 2e2 group or under new ownership. 

Sir Peter Rigby may have recently signed off the acquisition of Kavanagh but he has also been busily building another empire that has not made the headlines in the channel press - he owns Coventry Airport.

The airport went into administration last year and at the end of April, Rigby's aviation group Patriot Aerospace bought it to use as a commercial regional hub for business, leisure and freight flights.

However, another sort of traveller had been due to bestow the Midlands-based airport with his presence - Pope Benedict XVI.

He was expected to hold an open-air mass at the site that could have held up to 150,000 people but the papal plans were altered and he is now arriving at Birmingham airport to spend the last day of his trip in the Black Country.

It is not clear if the Pope would have been granted an audience with Sir Peter but the Catholic Church could probably do with some advice on how best to transform its data centre, after all, there are more than 2,000 years of records in the Vatican vaults.

Calyx new owners Better Capital have spent the last few days talking to customers and creditors as the ink dries on the deal they penned at the end of last week to bring the networking integrator out of administration.

At such a time, customers obviously want reassurance about the future of their supplier, and indeed Calyx is now in much better financial health, clearing the balance sheet of some £100m worth of debt and progressing with a stronger backer.

However, conversations with creditors, to whom Calyx owed circa £6m, are likely to be a little more intense. Better Capital bought the business from the receivers and in doing so did not assume the debts of the previous owners.
 
This has left many creditors feeling very nervous that the monies owned will not be paid, and networking and storage vendor Brocade, which maintained a direct relationship with Calyx, is probably wishing it had adopted a two tier model to provide a buffer via distribution.

Nick Saunders, head of portfolio at Better Capital, who starting working with Chairman John Moulton when he headed up VC Alchemy Partners, told Reseller Radar that it was in the process of sorting out the situation.

"We've not acquired the old business, we acquired the assets and so the new business does not carry those liabilities. But we are keen to develop relationships with our suppliers and are talking to those on a case by case basis.

"No vanilla answer applies to everyone," he added, "there are some creditors that are nervous, but as well as reassuring customers, you have to talk to suppliers in this process."

The management structure should be clearer by next week and if Calyx can smooth the way with key suppliers, it has an opportunity to turnaround the loss making operation; carving off undesired parts starting with the IT services business in Ireland.

It is likely that industry watchers will be able to draw some parallels with software firm Cedar, a business Moulton bought while at Alchemy - he sliced and diced the operation in the turnaround phase and when it was sold, the core business was a quarter of the size of the operate he bought.

DSG International is no more after the proposed name change to Dixons Retail was overwhelmingly voted in by shareholders.

At yesterday's annual general meeting (AGM), all proposed resolutions were passed including the re-appointment to the board of chief executive John Browett, chairman John Allan and FD Nicolas Cadbury.

The back to roots rebranding - approved by 97.74% of shareholders - was first revealed earlier this summer and designed to identify the group's core market focus.

At the time a spokesman at the retailer said "Dixons is an iconic brand....we wanted a simple solution" but insisted this did not signify a change in corporate direction and a precursor to the sale of the B2B operations.

There were rumours a year ago that Systemax were doing due diligence on DSGi Business, comprising PC World Business, Equanet and online brands but all has subsequently gone quiet on that front.

Phil Birkbeck took control of the business at the start of the year - following the departure of Jerry Roest in 2008 and interim bosses Martin Dorchester and James Walsh - but its commercial operations have not yet recovered. 

Dixons' reseller businesses are already a shadow of their former self and long term it is unlikely that they will remain within the group,

However with the exit of many of the B2B veterans and resellers noting a decline in competitive tenders situations against DSGi Business, who will give the business' bosses and its shareholders a return they'd approve?