Reliance Globalcom is to acquire London-based Vanco Group, which provides global managed network services to some 220 customers. They include AVIS, British Airways, Siemens, Virgin Megastores.
However, on 6th May, Vanco issued a shock profits warning, its shares were suspended and its chief executive and founder, Allen Timpany, resigned. Over the previous year, the company's shares had fallen by 80% as anxiety grew about the disparity between turnover and cash flow.
According to the Financial Times, Reliance Globalcom (a subsidiary of India's integrated telecom service provider Reliance Communications) will pay Â£40 million (â‚¬50.2 million) for Vanco and take on its liabilities. Vanco owes some Â£123 million (â‚¬154.34 million) to banks, who will be repaid about a third of the debt, while shareholders won't receive anything.
"The acquisition of Vanco is in line with Reliance Globalcom's vision to create one of the Top 5 Global Datacommunications Enterprises in the world," said Anil Dhirubhai Ambani, Chairman, Reliance Communications. "The combination of Reliance Globalcom's extensive capabilities and VANCO's unique global experience would create a new breed of integrated services communications powerhouse," he added.
Allen Timpany famously established Vanco in 1988, having bought the name from a newspaper advert for Â£1.
Reliance Communications is also in talks to take over operator MTN - see today's story.