Feeds

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

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

High performance access to file storage

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". ®

High performance access to file storage

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.