News
26/04/2010
Recommended cash acquisition of Morse plc by 2e2 Limited
Transaction Overview
- The Boards of Morse and 2e2 are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued share capital of Morse by 2e2 (the "Acquisition").
- The terms of the Acquisition value each Morse Share at 51 pence and the entire existing issued and to be issued share capital of Morse (on a fully diluted basis but after excluding Morse Share Options with an exercise price of 51 pence per share or more) at approximately £69.8 million in aggregate.
- The Acquisition is unanimously recommended to Morse Shareholders by the Morse Directors. They have provided undertakings that represent approximately 2.9 per cent. of Morse’s existing issued share capital.
- Furthermore, 2e2 has also received shareholder irrevocable undertakings and letters of intent in respect of 70,268,156 Morse Shares in aggregate representing approximately 54.1 per cent. of Morse's existing issued share capital.
Background to, and reasons, for the transaction – Strategic Rationale
- 2e2 views the Acquisition as an important strategic opportunity to create an experienced UK and European IT services provider with greater capabilities that will benefit from larger scale, greater market visibility and increased attractiveness to the Enlarged Group's enterprise, corporate and public sector customer base.
- The Enlarged Group will provide both sets of customers with a broader range of complementary services and solutions including managed services, hosting, unified communications, data management, security, business application solutions and “cloud computing”.
- The Acquisition will allow 2e2 to increase its scale and to accelerate its plans to offer a range of architectural solutions to its customers that aim to change business outcomes and offer reduced cost of operations.
- The Enlarged Group will also enjoy enhanced capabilities and relationships with the key technology suppliers within the industry. The combined sales and EBITDA of 2e2 and Morse for the year ended 31 December 2009 were £414m and £40m (excluding any synergies) respectively.
- 2e2 expects significant benefits from cost synergies and cross-selling opportunities within the enlarged customer base and enhanced positioning within its chosen industry sectors.
Financing
The acquisition is being financed by a subscription for new ordinary shares in 2e2 Holdings Limited and new loan notes in 2e2 Investments Limited by Hutton Collins Capital Partners II and Hutton Collins Capital Partners III. 2e2 Holdings Limited and 2e2 Investments Limited are part of the 2e2 Group.
Commenting on the acquisition
Commenting on the Acquisition, Eric Priestley, Non-Executive Chairman of 2e2 said: "This acquisition represents a further significant step in 2e2’s operational and strategic progress. There is an excellent fit between the two companies and the acquisition consolidates 2e2's position as one of the UK's leading vendor-independent IT services providers. We are confident that this transaction will deliver good shareholder value."
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