2e2 sets out plan to integrate Morse


2e2 sets out plan to integrate Morse

Microscope contributor

2e2 management has hinted that once the major work to integrate Morse is completed in the desired six to nine month timeframe, they will be in an appropriate state to have conversations with potential buyers of the expanded group.

The £69m acquisition of services-based reseller Morse was finalised today, doubling 2e2's £200m-a-year revenues.

It was financed in a debt for equity deal so as not to add to the circa £135m the firm already owes bankers.

Though Morse has a bit of a reputation for being a tin shifter, 2e2 group business development director Nick Grossman said the acquisition opened up services that it did not currently offer customers.

"This deal gives us access to Morse's flexible resourcing business and the SAP practise," he told MicroScope.

Around half of Morse's revenues were derived from selling hardware and 2e2 said this would bolster its HP and Sun franchises to build greater economies of scale.

The integration of the firm is a far bigger project than any conquest 2e2 has made in the past but management expects to bring the two companies together in "six to nine months" said Grossman.

He reckoned the delisting of Morse will result in instant savings as the board steps down, and stock exchange charges and brokerage fees are removed.

"Inevitably there will be some synergies, but it is not a cost out or people out play," he revealed, "You immediately get some upside effect just because you come off the market, we saw that with Compel and Netstore and we'll see it again here."

Prior to making the acquisition of Morse, there was talk in the industry that 2e2's principal backer Duke Street was keen on making an exit from the business; its four year investment anniversary is in September this year.

"Like all private equity houses they increasingly [trying] to understand how they can realise their investment but we are all pretty realistic at the moment," he said.

Stock market valuations are "pretty low" and are unlikely to recover for the remainder of the year, which rules out an IPO, something that 2e2 has previously discounted.

However, completion of the integration work could trigger interest in 2e2, said Grossman.

"We'll continue to keep an eye on valuations, we'll have a conversation if someone wants to chat to us, there is no active marketing of the business at the moment but we will be ready to chat," he told MicroScope.


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