Gamma’s bid deadline: partners should count their exposure now

On 29 September the Takeover Panel executive ruled that, unless it consents otherwise, Waterland Private Equity Investments must, by 5pm on 13 October, “either announce a firm intention to make an offer for Gamma in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for Gamma”. That is the seventh day before Gamma Communications’ shareholders meet on 20 October to vote on the recommended cash offer from Epiris, a London-based private equity firm. The deadline falls away if a party other than Waterland announces a firm offer first. Gamma, Epiris and Waterland have all accepted the ruling.

Epiris’s offer, announced on 1 September, is 1,120p a share. According to the announcement, that values Gamma at about £1,015m on a fully diluted basis, with an implied enterprise value of about £1,079m, and is a premium of about 53% to the £7.32 closing price on 7 April, the last trading day before the offer period began. Martin Hellawell, Gamma’s chair, said that day that the board “remains confident in the Company’s strategy and long-term prospects” but “has nevertheless concluded that the Acquisition provides Gamma Shareholders with attractive and certain value in cash”.

Waterland has made no firm offer. On 21 August Gamma confirmed that Waterland was among the parties in preliminary discussions about a possible offer, and said the Giacom Group, which describes itself as a channel-only marketplace and software provider for UK resellers and MSPs, was acting in concert with Waterland “whereby Giacom will acquire certain business divisions of Gamma”. That announcement did not say which divisions. On 11 September Waterland said it was no longer acting in concert with Giacom, and added: “Waterland continues to consider its interest in Gamma but there can be no certainty that any offer will be made for Gamma by Waterland nor as to the terms of any offer, if made.”

For Gamma’s channel partners, the ruling shortens the wait. By 13 October, unless the Panel consents otherwise, they should know whether Waterland will make a firm offer. If it does not, the vote on 20 October should settle which private equity owner they will be dealing with, subject to court sanction and regulatory approvals. Which bidder wins is not their decision. How much of their own business rests on one wholesale platform is, and that call should be made now rather than after the new owner’s review.

What partners have riding on Gamma

Gamma’s half-year report, published on 7 September, says it serves UK small and medium-sized enterprises (SMEs) through more than 1,500 channel partners. Its UK SME segment, which sells calling, cloud communications and connectivity to small businesses through that network, produced 39% of group gross profit in the six months to 30 June, down from 43% a year earlier. Revenue was flat at £141.7m, but gross profit fell 7% to £69.3m and gross margin slipped from 52.7% to 48.9%. Gamma blamed pricing pressure, with new customers “typically being won on lower-margin solutions and renewals won at lower-margins”, and said the first half of 2025 had benefited from some non-recurring credits.

Partners are also wired into Gamma’s systems. The report says that with around 1,500 partners already using Gamma’s portal, it has a “ready-made route” to support customers through the move from copper to fiber, and it has added FibreXchange, which lets partners source fiber from several suppliers. The public switched telephone network (PSTN) switch-off, which the report dates to 31 January 2027, falls within the first half of 2027, when Gamma expects the takeover to complete.

Both bid plans leave room for change

Neither route disclosed so far rules out change to the business partners buy from. The Waterland structure described on 21 August would have passed “certain business divisions” to Giacom, though Waterland has since said it is no longer acting in concert with Giacom. Epiris says its near-term strategy is “similar in many respects” to Gamma’s current one, and that increased investment and a focus on sales execution and product innovation will give Gamma the chance to “return to organic growth in the UK”. It does not intend any material reduction in headcount in the first 12 months after completion.

The same announcement sets out a strategic evaluation Epiris intends to run with Gamma’s management after completion. It is intended to look at options for the product portfolio “including asset and product acquisitions, disposals”, and at how to “mitigate performance in declining segments”. Neither Epiris’s announcement nor Waterland’s statements say anything specific about partner pricing or terms.

Visibility changes too. The scheme document, published on 25 September, says Gamma will apply to cancel its listing and the trading of its shares on the Main Market, and expects the scheme to take effect in the first half of 2027. The segment margins quoted above come from a listed company’s half-year report.

Decide before the new owner does

The next fortnight is when partners can do this work, before any new owner has set out its plans. Three numbers belong in front of every Gamma partner’s board: the share of its recurring gross margin that runs on Gamma, the share of its customers whose lines and numbers sit on Gamma’s platform, and how long it would take to move a customer to a second supplier if products or terms changed after completion.

The PSTN switch-off makes the last of those cheaper to answer now than later. Every customer moved off copper before 31 January 2027 is a customer whose platform is being chosen anyway. Partners that want a second supplier can build it into those migrations, and those content with Gamma can say so on the evidence rather than by default.

None of this requires taking a side between Epiris and Waterland. Shareholders will decide who owns Gamma. Partners decide how far that choice reaches into their own business.