Daisy merger move will create £1.4bn connectivity giant

Lancashire headquartered telecoms group Daisy is to merge its business-to-business operations with Virgin Media O2 to create “a major new force” in communications and IT.

The move will see them combine their direct B2B (business-to-business) operations into a giant new entity with an anticipated turnover of around £1.4bn. It has been described as a “British business connectivity powerhouse”.

Nelson headquartered Daisy will hold a 30 per cent stake in the new entity. It will be led and chaired by Daisy Group founder Matthew Riley, while Virgin Media O2 Business’ managing director Jo Bertram will serve as its chief executive.

At the outset, both businesses will operate under their separate brands from their current office bases. The transaction is expected to close in early H2 2025, subject to customary regulatory approvals.

Based in Nelson, where the business was formed in 2001, Daisy employs 1,400 people across nine UK sites. It is one of the UK’s largest independent, specialist communications groups, delivering a range of cloud, communications and IT solutions to companies across the country.

Having expanded the business organically and through a series of acquisitions over the past two decades, Daisy Group has been described as one of the country’s most successful growth stories. Its chairman Matthew Riley, said: “This is a significant milestone in Daisy’s 24-year history.

“This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK.

“Growth is top of the political and business agenda – inextricably linked to this is access to world-class IT and communications infrastructure that is integrated and can scale.

“Our new entity, which brings together two highly successful companies, will deliver a comprehensive solution for the fast-changing needs of UK organisations supported by specialist teams that have a relentless focus on customer service.

“It will be driven by the entrepreneurial spirit for which we are known and will catalyse the next phase of our ambitious growth plans.”

A statement announcing the merger deal said: “The dedicated new company will serve the communications and IT needs of hundreds of thousands of UK businesses – small offices, SMEs, large enterprises and public sector organisations, as well as indirect partners.

“It will have greater scale, expertise and focus, while boosting digital capabilities, benefitting from Virgin Media O2’s next generation fibre and mobile infrastructure, combined with Daisy’s end-to-end IT and sales management platforms and award-winning customer service.

“The new entity will offer significant economies of scale and a range of best-in-class digital-first connectivity solutions and managed services all under one roof.”

It added that the company would be supported by fixed and mobile connectivity wholesale agreements with Virgin Media O2, and supplier arrangements with Telefónica and Liberty Global, “to leverage high-growth products and services from across the portfolio of those wider shareholder groups”.

Virgin Media O2’s fixed and mobile wholesale operations, which include smart metering and connectivity to MVNO customers, will remain fully owned within Virgin Media O2.

Lutz Schüler, chief executive of Virgin Media O2, said: “Combining Virgin Media O2 Business with Daisy Group is the perfect pairing and creates a new British business connectivity powerhouse and greater competition in the market.

“For us, it’s a big step forward in our journey to boost B2B growth and provide UK businesses of all sizes with the best digital and connectivity offerings.

“Following completion, the new company will have the scale, talent, focus and infrastructure needed to drive digital transformation and provide business customers with an innovative one-stop shop for all their communications and IT needs. We can’t wait to get started on this next chapter in partnership with Daisy.”

Based on full year 2024 performance, the new company will have adjusted EBITDA of £150m and adjusted EBITDA less Capex of £100m.

It is expected to deliver around £600m of operational synergies on a net present value basis, including integration costs, primarily attributable to cost savings.

The transaction will be structured through the contribution of an approximately £425m secured intercompany loan by Virgin Media O2 and approximately £835m of debt by Daisy Group.

Virgin Media O2 is set to raise additional financing at its cost of debt at closing, enabling the repayment of existing Daisy facilities through a second secured intercompany loan.