DIXONS Group, the electrical retailer, said it wants to create a ''one-stop-shop'' in information technology (IT) and telecoms for small business customers having acquired Direct Telephone Services, trading as Genesis Communications, from its founder for (pounds) 31m.
The acquisition of the business-to-business mobile phone service provider was funded with (pounds) 27m in loan notes, plus up to (pounds) 2m in cash and a further (pounds) 2m in loan notes, to be paid depending on meeting earnings targets.
John Clare, chief executive of Dixons, said: ''Bringing Genesis into the Dixons Group will greatly strengthen our telecoms offer to business customers of PC World and the Link.
''This acquisition is a significant step in our objective of creating a leading IT and telecoms convergent solutions provider in the business-to-business market.''
Genesis is based in the north-west of England but has a nationwide sales force spanning 12 regional offices, including one in Scotland. It also acquires subscribers through its telesales team. It focuses on companies with up to 250 employees.
Dixons has been steadily growing its presence in the market - about 400,000 business account holders bought from the retailer last year.
A spokeswoman said the attraction of Genesis, in a fragmented market, was that it had a ''strong sales force'' with nationwide coverage.
Dixons said there would be no job losses from the firm's 380 staff as a result of the deal. It also said that (pounds) 2m of the (pounds) 31m paid for the company has been set aside as a ''golden handcuffs'' fund for senior managers.
''We hope to create more jobs over time. Opportunities for the staff should increase rather than decrease,'' she added.
In addition, Brian Kennedy, the firm's founder and former sole shareholder, will pocket (pounds) 27m from the sale of the business plus another (pounds) 2m if the company hits specified earnings targets over an undisclosed period.
Kennedy is a well-known entrepreneurial figure in the north-west of England and is the owner and founder of the Latium Group, which owns Everest, Weatherseal and Wendland.
City analysts were nonplussed by the deal, saying it was too small to have a major impact on Dixons' earnings.
Rhys Williams, analyst at Seymour Pierce, said: ''It fits in with the company's attempts to implement a business services proposition, which is higher margin. It shores up their whole offering.''
And David Stoddard, analyst at Teather & Greenwood, added: ''I don't know if it's quite that strategic. We have seen this with
companies such as Carphone Warehouse. It is partly a function of their belief as a customer-
facing business that they are well-placed to handle that market.''
Genesis reported sales of (pounds) 51m for the year to October 2001. Dixons said the business was profitable and cash-generative.
Its management team, led by managing director Ian Blackhurst, will continue to lead the business as part of the Dixons Group.
The electrical retailer's shares fell 5p to close at 227.5p last night.
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