Feeds

Dell tried gobbling doomed Brit IT giant 2e2 for £350m, say insiders

Its backers 'wanted £400m', then the biz imploded

Providing a secure and efficient Helpdesk

Exclusive Dell narrowly avoided buying Brit IT giant 2e2 before the integrator went titsup, say sources close to the £350m talks.

The negotiations collapsed after 2e2's venture-capital backers Duke Street Capital held out for more. Both sides met across the table a year ago, long before 2e2's UK operations nosedived into administration. A buy price was never thrashed out.

"Dell offered £350m," a well-placed industry insider told The Channel. "[2e2 CEO] Terry Burt did a good job of advising the VCs that 2e2 was in a good shape and growing."

The top brass at 2e2 held share options in their company, so the Texan PC giant offered to throw a £20m earn-out into the pot in the form of Dell shares.

But Duke Street, which coughed up £130m to take 2e2 off rival equity house Gresham Investments in 2006, wanted upwards of £400m, our insiders said. 2e2's other venture capitalist Hutton Collins did not own an equity stake.

The source said that in reality the business was "crippled" by £270m debts that would mature by 2018. In hindsight a sale would have been the best option.

Dell wanted 2e2 for the integrator's substantial hosted and managed services business, our insiders claimed. But Dell refused to up its offer, our sources said, so the deal was not taken to 2e2's syndicate of five banks. The rest is history: 2e2 went pop in January this year after failing to refinance.

One well-placed insider further claimed that struggling 2e2 tried to raise the finance to buy Northgate Managed Services, but failed and the biz was latterly sold to Capita. Our man said the acquisition would have increased the debt owed by 2e2 but would have helped ease its working capital woes, the latter ultimately leading to the collapse of the firm.

Should the Dell deal have gone through, the Texan PC titan risked upsetting vast swathes of its partner network as it used 2e2 to front up its direct services arm.

Cable & Wireless Worldwide is also understood to have made a bid for 2e2 in the summer of 2011 but again the £350m offer was declined, sources previously told us.

Duke Street's PR man at Bell Pottinger said "Duke Street did not reject an offer from Dell". Burt refused to comment. A spokeswoman at Dell said it had "no additional information to share". ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple Pay is a tidy payday for Apple with 0.15% cut, sources say
Cupertino slurps 15 cents from every $100 purchase
Forget silly privacy worries - help biometrics firms make MILLIONS
Beancounter reckons dabs-scanning tech is the next big moneypit
Microsoft's Office Delve wants work to be more like being on Facebook
Office Graph, social features for Office 365 going public
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.