Virgin Media O2 to create £1.4bn giant in mega deal
Virgin Media O2 has announced plans to create a new communications and IT giant which is expected to turn over around £1.4bn.
The move will see Virgin Media O2 and Daisy Group combine their direct B2B (business to business) operations.
Virgin Media O2 is to own 70 per cent of the new entity, with Lancashire-headquartered Daisy Group holding the remaining 30 per cent.
It will be led and chaired by Daisy Group founder Matthew Riley while Virgin Media O2 Business’ managing director Jo Bertram will serve as its chief executive.
In a statement, Virgin Media O2 said the new business will serve the communications and IT needs of hundreds of thousands of UK businesses – small offices, SMEs, large enterprises and public sector organisations, as well as indirect partners.
It added that its fixed and mobile wholesale operations, which include smart metering and connectivity to mobile virtual network operator customers, will remain fully owned within Virgin Media O2.
Virgin Media O2 hails ‘perfect pairing’
Lutz Schüler, CEO of Virgin Media O2, said: “Combining Virgin Media O2 Business with Daisy Group is the perfect pairing and creates a new British business connectivity powerhouse and greater competition in the market.
“For us, it’s a big step forward in our journey to boost B2B growth and provide UK businesses of all sizes with the best digital and connectivity offerings.
“Following completion, the new company will have the scale, talent, focus and infrastructure needed to drive digital transformation and provide business customers with an innovative one-stop shop for all their communications and IT needs. We can’t wait to get started on this next chapter in partnership with Daisy.”
Based on financial results achieved in 2024, the new business is expected to have pro forma revenues of around £1.4bn and an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) of £15m.
The transaction will be structured through the contribution of an approximately £425m secured intercompany loan by Virgin Media O2 and around £835m of debt by Daisy Group.
The deal is expected to close by the end of the first half of 2025.
Subscribe to the Boardroom Uncovered podcast from Morning Wire here.
Deal will ‘revolutionise landscape’
Daisy Group founder and chairman Matthew Riley added: “This is a significant milestone in Daisy’s 24-year history.
“This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK.
“Growth is top of the political and business agenda – inextricably linked to this is access to world-class IT and communications infrastructure that is integrated and can scale.
“Our new entity, which brings together two highly successful companies, will deliver a comprehensive solution for the fast-changing needs of UK organisations supported by specialist teams that have a relentless focus on customer service.
“It will be driven by the entrepreneurial spirit for which we are known and will catalyse the next phase of our ambitious growth plans.”
Advisers for Virgin Media O2 and its shareholders included Jefferies as financial adviser and Deloitte supporting on financial due diligence and tax.
Legal advisers included A&O Shearman, Simmons & Simmons and Ropes & Gray providing legal advice in relation to the financing.
For Daisy and its shareholders, Houlihan Lokey and EY acted as financial advisers, PwC acted as tax advisers and Paul Weiss, Clifford Chance and DWF as legal advisers.