Waterland weighs higher bid for Gamma Communications

Dutch private equity firm Waterland is said to be preparing a higher bid for UK-listed telecommunications company Gamma Communications, potentially igniting a bidding war with current suitor Epiris, according to the Sunday Times. Waterland is eyeing a proposal exceeding the £1.08bn offer Gamma struck with Epiris last week. Epiris secured Gamma's future by agreeing to a purchase price of 1,120 pence per share, following a competitive bidding process.

Waterland had previously engaged in talks with Gamma in August regarding a potential takeover, and their renewed interest now risks reviving the acquisition talks. The Dutch investment firm reportedly has a distinct strategy in mind for the business. Waterland's plan involves acquiring Gamma and then selling off two divisions catering to small and medium-sized enterprises to UK telecoms provider Giacom.

These divisions contributed nearly 30% of Gamma's revenue last year, making the proposed divestiture a crucial component of Waterland's investment rationale. While Gamma sees Epiris' offer as providing more certainty and a lower risk of execution, the report suggests the company views Waterland's more intricate approach as potentially more valuable.

The renewed bid from Waterland surfaces just days after Gamma officially accepted the Epiris deal, leaving shareholders to contemplate between a straightforward takeover and a higher-valued proposal entailing significant restructuring of the group. For Waterland, a successful bid could offer a chance to disentangle Gamma's operations and possibly enhance value through the sale of its SME-focused divisions to an interested industry buyer.