Virgin Media O2 and Daisy Group have announced a merger of their direct B2B operations to establish a significant player in the UK’s business communications and IT market. The new entity, featuring annual pro forma revenues of approximately £1.4bn, will be consolidated by Virgin Media O2 with a 70% stake, while Daisy Group will maintain a 30% stake.
Matthew Riley, founder of Daisy Group, will chair the company, with Jo Bertram, managing director of Virgin Media O2 Business, serving as CEO.
The company will aim to address the communications and IT needs of various UK businesses, including small offices, SMEs, large enterprises, and public sector organisations, alongside indirect partners. It will leverage Virgin Media O2’s fibre and mobile infrastructure with Daisy’s IT platforms and customer service to enhance digital capabilities.
The new entity will additionally provide a range of services, including cloud-based communication tools, 5G Private Networks, IoT connectivity, and security solutions, alongside AI-powered products like O2 Motion. The offerings will cater to both new and existing customers. Virgin Media O2 will retain ownership of its fixed and mobile wholesale operations, including smart metering and connectivity services for MVNO customers.
“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,” said Virgin Media O2 CEO Lutz Schüler. “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.”
Merger anticipates £1.4bn in annual revenues
Financial projections for the full year 2024 indicate pro forma revenues of around £1.4bn, with adjusted EBITDA at £150m and adjusted EBITDA less capex at £100m. The merger is anticipated to generate approximately £600m in operational synergies, primarily through cost savings, translating to a pre-tax annual run-rate of about £70m by 2030.
The transaction structure involves a secured intercompany loan of around £425m from Virgin Media O2 and approximately £835m of debt from Daisy Group. Virgin Media O2 plans to secure additional financing to repay existing Daisy facilities through a second secured intercompany loan. The merger is expected to finalise in early H2 2025, pending regulatory approvals, with further announcements regarding directors and management to follow.
“This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK,” said Riley. “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.”
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