ITNet admits £200m takeover talks

One of the UK's biggest government IT services suppliers has confirmed it is the subject of a possible takeover bid that could be worth over £200m.

ITNet admitted today in a statement to the London Stock Exchange that it is in preliminary discussions "which may or may not lead to an offer for the whole issued share capital" of the company and that a further announcement will be made in due course.

City estimates put a realistic bid for the company in the region of £200m. Georgina O'Toole, analyst at Ovum Holway, said the news doesn't come as any great surprise and that ITNet is an obvious target for one of the big IT services players looking to get a bigger foothold in the UK government sector.

"We are only speculating but one possibility might be IBM. 'Big Blue' recently partnered with ITNet at Bradford Council to win a substantial outsourcing deal and we believe it is keen to gain a bigger foothold in the sector. We wait with interest for the suitor to be identified," she said.

ITNet was formed in 1995 out of the IT department at Cadbury Schweppes, following a management buyout led by current CEO Bridget Blow. The company later floated for £30m, and Blow could be in line for another huge payout if the takeover bid is successful.

ITNet has had a series of recent contract wins in local government but came a cropper in June when it was bumped from an £83m Cabinet Office hosting and management deal less than a year into the five-year term.