LONDON: Virgin Media O2 (VMO2) announced Monday that it will merge its business-to-business operations with Daisy Group to form a major new player in the United Kingdom’s business communications and IT sector.
The newly established entity will generate annual pro forma revenues of approximately £1.4 billion. VMO2 will hold a 70% stake in the business, with Daisy Group retaining the remaining 30%. The company will be chaired by Daisy Group’s founder, Matthew Riley, while Jo Bertram, managing director of VMO2 Business, will serve as CEO.
Initially, both companies will continue to operate under their existing brands at their current office locations. However, changes may be implemented over time. The merger is expected to drive further growth through increased scale, operational efficiencies, and a combined suite of products. While expansion is a focus, potential job cuts could arise as part of efforts to eliminate redundancies and streamline costs.
The company will serve hundreds of thousands of UK businesses, leveraging VMO2’s fixed fiber optic and mobile network infrastructure and Daisy’s IT and sales management platforms.
Lutz Schüler, CEO of Virgin Media O2, described the move as a significant step toward enhancing the UK’s business connectivity sector.
“Combining Virgin Media O2 Business with Daisy Group is the perfect pairing and creates a new British business connectivity powerhouse,” Schüler said in a statement. “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.”
Daisy Group’s Riley echoed the enthusiasm, calling the transaction “transformational.”
“This will revolutionize the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK,” Riley said.
Financially, the new entity is projected to achieve an adjusted EBITDA of £150 million for 2024 and £100 million in adjusted EBITDA less capital expenditures. Over time, the merger is expected to deliver approximately £600 million in operational synergies, with a pre-tax annual run-rate of around £70 million by 2030.
The transaction includes a £425 million secured intercompany loan from VMO2, alongside approximately £835 million in debt from Daisy Group. VMO2 will raise additional financing upon closing to enable the repayment of Daisy’s existing obligations.
The deal is expected to close in the second half of 2025, pending regulatory approval. Advisors involved in the transaction include Jefferies, Deloitte, A&O Shearman, and Ropes & Gray for VMO2, while Daisy Group’s advisors include Houlihan Lokey, EY, PwC, and Clifford Chance.