Feeds

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

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

Security for virtualized datacentres

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". ®

Security and trust: The backbone of doing business over the internet

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
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Why Oracle CEO Larry Ellison had to go ... Except he hasn't
Silicon Valley's veteran seadog in piratical Putin impression
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
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.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.