Dutch private equity firm Waterland is reportedly preparing a higher offer for UK-listed telecommunications provider Gamma Communications, potentially setting up a bidding contest with rival sponsor Epiris, according to a report by the Sunday Times.
Waterland is considering a proposal worth more than the £1.08bn bid agreed by Gamma with Epiris last week.
Epiris agreed to acquire Gamma for 1,120 pence per share, securing the company’s backing after a competitive process.
Waterland had already held preliminary discussions with Gamma in August over a potential takeover, and its reported interest now threatens to reopen the transaction.
The Dutch buyout firm is understood to have a different strategy for the business. Under its proposed structure, Waterland would acquire Gamma and subsequently sell two divisions serving small and medium-sized enterprises to UK telecoms services provider Giacom.
The businesses targeted for disposal generated almost 30% of Gamma’s revenue last year, making the proposed carve-out a significant element of Waterland’s investment case.
Gamma is understood to view the Epiris proposal as offering greater certainty and a lower risk of execution than Waterland’s more complex approach, according to the report.
The potential renewed bid comes just days after Gamma formally agreed to the Epiris transaction, meaning shareholders could now face a choice between a straightforward take-private deal and a higher-value proposal involving a substantial restructuring of the group.
For Waterland, a successful bid would provide an opportunity to separate Gamma’s operations and potentially unlock value through the sale of the SME-focused businesses to an industry buyer.
