Business UK ISP Gamma Reach Agreement on £1bn Cash Offer by Epiris

Business ISP and IT provider Gamma Communications has this morning confirmed that their board has proposed to accept a cash offer from private equity firm Epiris, which implies an enterprise value of approximately £1.079bn. The deal, if approved, will be managed through a newly incorporated entity called Bradbury Bidco Limited.

Regular readers will recall that the battle for control of Gamma has been going on for months now, with Matthew Riley’s Giacom, Oakley Capital, Waterland Private Equity and Providence Equity Partners frequently being linked to a deal as part of different approaches for the provider (Waterland’s engagement was also linked to a potential agreement with Giacom).

However, the private equity firm Epiris, which was recently linked to separate talks for TalkTalk’s wholesale business (PXC), had also been engaged in talks with Gamma. Last month the Takeover Panel appeared to set deadlines for both Epiris and Waterland to lodge a formal offer or lose their chance to bid again for several months.

The latest development occurred this morning after the boards of Gamma Communications and Bradbury Bidco Limited, a newly incorporated entity formed by funds managed (or advised) by Epiris for the purpose of making an offer for Gamma, announced that they have “reached agreement on the terms of a recommended cash offer” to be made by Bidco for the entire issued and to be issued ordinary share capital of Gamma.

The Acquisition Price values the entire issued and to be issued ordinary share capital of Gamma at approximately £1,015 million on a fully diluted basis, with an implied enterprise value of approximately £1,079 million. Gamma’s Directors, who have been advised by Barclays and Q Advisors as to the financial terms of the Acquisition, said they consider the terms of the Acquisition to be both “fair and reasonable“.

Gamma’s Directors will now recommend unanimously that the company’s shareholders accept the offer, after which there will be the usual regulatory clearances to overcome.

Martin Hellawell, Chair of Gamma, said:

“Gamma has built a leading position in European business communications through sustained investment in its products, technology, people and customer relationships. The Board remains confident in the Company’s strategy and long-term prospects. The Board has nevertheless concluded that the Acquisition provides Gamma Shareholders with attractive and certain value in cash. Having considered the terms of the Acquisition carefully, the Board intends unanimously to recommend it to Gamma Shareholders.”

Ian Wood, Partner of Epiris, said:

“Gamma is a complex and highly resilient business, with strong market positions in the UK and Germany and a growing presence across Europe. Epiris has followed the company, and the wider telecoms sector, closely for a number of years, and we are excited to work with Gamma’s management team to continue its growth as a private company. We believe that the Acquisition represents a compelling and deliverable offer which provides Gamma Shareholders with certainty of value. We are delighted to have the support of HarbourVest and Limewood Capital as co-investors in this transaction.”

The news comes a year after Gamma signed a 6-year commitment with B2B telecoms company O2 Business, which extended an existing agreement and expanded it to reflect the recent merger between VMO2 Business (Virgin Media and O2) and Daisy Group (full details). A 7-year wholesale revenue agreement is included in that. The deal also included the transition Gamma’s UK SME direct customer base to O2Business, with Gamma’s remaining UK direct sales channels consisting of digital channels and providing solutions to enterprise customers.

Assuming all goes well then the Acquisition is currently expected to complete during the first half of 2027.