Cable giant Liberty Global has inked a deal with MXC Capital, an AIM-listed tech investor, to create a buy-and-build IT services business that sells to UK SMEs.
In a stock market announcement, MXC said:
“The newly established joint venture company will initially seek to undertake a series of acquisitions in order to create an enterprise of size and scale, taking advantage of MXC's knowledge and understanding of the market, Liberty Global's existing network and solutions, as well as the opportunities both parties see to consolidate what remains a fragmented market.”
The businesses made no further comment to The Register.
Anthony Miller, analyst at TechMarketView, pointed out that the UK is not short of mid-market IT services players, and the joint venture will consolidate “the very fragmented market.”
“However, the mid-market is fragmented for very good reasons – mainly because SMEs tend to prefer to be clients of service providers of similar size, rather than get lost down the bottom of the client list of an industry giant," he added.
“Indeed it’s hard to point to any UK-focused buy-and-build IT services supplier that has achieved scale through this route – few make it past the £100m revenue line before ‘something happens’.”
There are of course exceptions, including Daisy Group, which has made close to 50 buys since it was formed in 2001, and is currently a privately-owned entity since coming off the LSE in 2015.
DXC veteran Ian Smith and Tony Weaver have certainly got a track record in buying and merging companies. They staged a roll up on the storage integrator scene in the noughties, and more latterly in the security and the managed services provider spaces.
The services from the Liberty and MXC-owned vehicle are likely to be centrally consumed by Virgin Media Business, so it appears that the joint venture could be acquired by Virgin Media if it can get off the ground. ®