Virgin Media O2 and Daisy Group have announced a significant merger that will reshape the UK business communications and IT landscape. This strategic alliance aims to create a new entity valued at approximately £3 billion, combining their strengths to better serve UK businesses with enhanced digital connectivity and IT solutions.
Key takeaways
- The new company will be 70% owned by Virgin Media O2 and 30% by Daisy Group.
- Projected annual revenues of the merged entity are around £1.4 billion.
- The merger is expected to generate operational synergies of approximately £600 million.
- Matthew Riley, founder of Daisy Group, will serve as Chairman, while Jo Bertram from Virgin Media O2 will be the CEO.
- The deal is anticipated to close in early H2 2025, pending regulatory approvals.
Overview of the merger
The merger between Virgin Media O2 and Daisy Group is set to create a formidable player in the UK telecoms market, particularly in the business-to-business (B2B) sector. With a combined customer base of around 700,000, the new entity will leverage Virgin Media O2’s extensive fibre and mobile infrastructure alongside Daisy’s advanced IT solutions and customer service capabilities.
Leadership and structure
The new company will be led by:
- Matthew Riley (Chairman) – Founder of Daisy Group.
- Jo Bertram (CEO) – Managing Director of Virgin Media O2 Business.
Both leaders bring a wealth of experience and a shared vision for driving growth and innovation in the telecommunications sector.
Financial implications
The merger is expected to deliver significant financial benefits, including:
- Pro forma revenues: Approximately £1.4 billion based on 2024 performance.
- Adjusted EBITDA: Estimated at £150 million.
- Cost savings: Projected operational synergies of around £600 million, with a pre-tax annual run-rate of approximately £70 million by 2030.
The financial structure of the deal includes a secured intercompany loan of about £425 million from Virgin Media O2 and approximately £835 million of debt from Daisy Group, ensuring a robust foundation for the new entity.
Market impact
This merger is poised to enhance competition in the UK telecoms market, particularly against established players like BT Group. By combining their resources, Virgin Media O2 and Daisy Group aim to provide a comprehensive suite of services, including:
- Cloud-based communications tools
- 5G Private Networks
- IoT connectivity
- Security solutions
- AI-powered products
The new entity will cater to a diverse range of clients, from small offices and SMEs to large enterprises and public sector organisations, ensuring that it meets the evolving needs of UK businesses.
Future outlook
As the merger progresses towards completion, both companies are committed to maintaining their separate brands initially, with a focus on integrating operations and maximising efficiencies. The leadership teams are optimistic about the potential for growth and innovation, with plans to enhance customer service and expand their offerings in the rapidly changing telecommunications landscape.
In conclusion, the merger between Virgin Media O2 and Daisy Group marks a pivotal moment in the UK telecoms industry, promising to deliver enhanced services and greater value to businesses across the country. The anticipated synergies and combined expertise position the new entity as a key player in driving digital transformation for UK organisations.
Sources
- Virgin Media O2 and Daisy Group Announce New B2B Company to Create Communications and IT Powerhouse for UK
Businesses, Virgin Media O2. - Virgin Media O2 and Daisy unite to form £3bn business telecoms group | Money News, Sky News.
- UK’s Virgin Media O2 and Daisy Group combine in business telecoms, CNBC.
- Virgin Media O2 strikes tie-up with Daisy to form £1.4bn business telecoms giant, London Evening Standard.
- Virgin Media O2 UK and Daisy Group Anounce B2B Merger, ISPreview UK.
