Gamma Communications Takeover: CMA Merger Control and Channel Implications

Gamma Communications confirmed on 7 April 2026 that it is in preliminary discussions with multiple potential bidders. That announcement commenced an offer period under the City Code on Takeovers and Mergers (the Code). With revenue of GBP 645.8 million in 2025, a completed acquisition would be one of the largest transactions in the UK unified communications sector. For operators, channel partners and PE investors, the regulatory and commercial questions are immediate: how will the CMA assess this, what does the takeover process look like, and what should channel partners do now?

Gamma’s position in UK business communications

Gamma is a leading UK channel-led provider of unified communications as a service (UCaaS) and SIP trunking to the business market. It supplies voice, messaging, video and connectivity products to SMEs, public sector bodies and enterprise customers through a network of over 3,000 channel partners, as well as through direct sales. In the year ended 31 December 2025, Gamma reported revenue of GBP 645.8 million (up 11%), gross profit of GBP 348.2 million (up 16%, margin 54%), and adjusted EBITDA of GBP 141.7 million (up 13%). Cash conversion was 93%.

That financial profile makes Gamma attractive to acquirers. It is a platform business with recurring revenue, high margins and low capital intensity. Its European expansion, including the EUR 196 million acquisition of Starface, a German UCaaS platform, completed in February 2025, adds geographic diversification. But Gamma’s position as a major wholesale voice platform in the UK channel is what defines much of its strategic value. Any acquirer would inherit relationships with thousands of resellers who depend on Gamma’s network for their end-customer voice and data services.

The takeover process: Code, Panel and deal structure

Gamma is listed on the Main Market of the London Stock Exchange, having transferred from AIM on 2 May 2025. The Code applies to offers for companies whose shares are admitted to trading on a UK regulated market. The Panel on Takeovers and Mergers (Panel), whose functions are set out in Chapter 1 of Part 28 of the Companies Act 2006, supervises the conduct of the takeover. The Code is not concerned with the financial or commercial merits of a takeover, nor with public policy questions such as competition. Its purpose is to ensure shareholders are treated fairly, have access to information, and are not denied the opportunity to decide on the merits of an offer.

The Panel has granted Gamma a dispensation from the requirement under Rules 2.4(a) and 2.4(b) to identify potential offerors. This dispensation is available unless a potential offeror has been specifically identified in rumour or speculation. To date, no potential offeror has been specifically identified in rumour or speculation so as to disapply the dispensation. The company has confirmed only that discussions are preliminary and that there is no certainty a formal offer will be made. The offer period commenced on 7 April 2026, which triggers disclosure obligations on dealings in Gamma shares under the Code and the FCA’s Disclosure Guidance and Transparency Rules.

There are two primary methods of implementing a takeover of a UK public company: a contractual takeover offer under section 974 of the Companies Act 2006, or a scheme of arrangement under Part 26 of the Companies Act 2006. In an offer, the offeror leads the process and needs acceptances from shareholders holding more than 50% of the voting rights to declare the offer unconditional as to acceptances. To acquire the remaining shares compulsorily, the offeror would normally need to reach the 90% threshold required for the statutory squeeze-out procedure. In a scheme, the offeree company leads, and the threshold is a majority in number representing 75% in value of shareholders present and voting at a court-convened meeting, followed by court sanction. The scheme has become the more common structure for UK public takeovers because a successful scheme delivers 100% of the shares without needing to invoke the compulsory acquisition procedure. Which structure is used here will depend on whether the bid is recommended by Gamma’s board and the number of competing bidders in the process.

CMA merger control: jurisdiction and thresholds

A completed acquisition of Gamma may fall within the CMA’s merger control jurisdiction under the Enterprise Act 2002 (EA 2002), as amended by the Digital Markets, Competition and Consumers Act 2024 (DMCCA). UK merger control is voluntary and non-suspensory: there is no requirement to notify the CMA before completing, and closing is not conditional on clearance. The CMA has jurisdiction where two or more enterprises cease to be distinct and at least one of three alternative tests is met.

In the Gamma case, the turnover test is the most straightforward route to jurisdiction. Gamma’s total revenue was GBP 645.8 million in 2025, of which the UK business represents a substantial proportion. Whether UK-specific turnover exceeds GBP 100 million will depend on how Gamma’s revenue is allocated between its UK and European operations (Germany, Spain, Netherlands). It is likely to exceed the threshold, but the position is not as self-evident as it would have been under the previous GBP 70 million threshold. If the turnover test is not met, the share of supply test provides an alternative route: Gamma holds a large share of the UK wholesale channel voice market, and any acquirer with overlapping UK communications activities could create or increase a share above 25%. The GBP 10 million minimum turnover limb of the share of supply test is comfortably met.

However, the CMA has power to investigate completed mergers and can unwind a transaction that produces a substantial lessening of competition (SLC). In practice, a deal of this scale is likely to attract CMA scrutiny. The CMA can and often does impose interim measures to prevent pre-emptive integration pending its investigation. For acquirers, regulatory due diligence on Gamma’s wholesale arrangements and General Conditions compliance is a priority workstream, and most advisers would recommend pre-notification engagement with the CMA.

CMA substantive assessment: how competition will be analysed

The CMA applies the SLC test: whether the merger may be expected to result in a substantial lessening of competition in any market in the UK. All investigations begin with a Phase 1 review. The CMA has 40 working days to decide whether the merger raises competition concerns sufficient to refer the matter for a more detailed Phase 2 investigation. At Phase 1, the parties can offer undertakings in lieu (UILs) of a reference to resolve concerns. If no acceptable UILs are offered, the CMA refers to Phase 2, where an independent inquiry group conducts a full investigation and has the power to prohibit the merger or impose remedies.

The identity of the acquirer determines the theory of harm. The CMA will define the relevant market (likely wholesale channel voice, UCaaS and possibly business connectivity in the UK), assess market shares and the HHI concentration index, and consider whether competition is reduced through horizontal effects, vertical effects, or both.

A PE buyer with no existing UK telecoms assets raises fewer competition concerns under UK telecoms regulation than a trade buyer already active in the market. The CMA’s analysis would focus on whether the acquisition reduces competitive pressure in the relevant markets and whether the acquirer’s portfolio includes businesses that raise conglomerate concerns.

To illustrate: if the acquirer were a vertically integrated operator already active in UK business connectivity, it would control a major wholesale voice platform used by thousands of competing resellers. The CMA would examine whether such an acquirer would have the incentive and ability to foreclose rivals’ access to that platform, whether by degrading quality, raising prices, or restricting access to Gamma’s wholesale services for channel partners who compete with the acquirer’s own business division. This is a recognised input foreclosure theory of harm. The CMA would also consider coordinated effects: whether the merger would alter the conditions of competition in a way that makes tacit coordination between remaining suppliers more likely.

If the CMA finds an SLC, it will consider whether mitigating factors offset the harm. These include countervailing buyer power (whether Gamma’s channel partners have credible alternatives), ease of entry or expansion by competitors, and merger-specific efficiencies that directly benefit customers. The CMA will also assess the counterfactual: what would happen absent the transaction, including whether a “failing firm” argument could apply (unlikely here given Gamma’s strong financial performance).

National security: the NSI Act

The National Security and Investment Act 2021 (NSI Act) applies regardless of the nationality of the acquirer. The NSI Act established a mandatory notification regime for acquisitions of entities active in 17 specified sectors, and a call-in power for other transactions that may raise national security concerns. Communications is one of the 17 specified sectors. Mandatory notification is required where the acquisition crosses the 25%, 50% or 75% share or voting rights thresholds in a qualifying entity active in a specified sector. A full takeover of Gamma would cross all three thresholds. Separately, the Secretary of State retains a voluntary call-in power for any transaction that may raise national security concerns, including acquisitions of material influence that fall below the mandatory thresholds.

Whether Gamma’s activities fall within the communications sector definition for mandatory notification requires a transaction-specific analysis against the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 and Gamma’s regulated activities. That question should be tested early in deal planning. If mandatory notification applies, completion before clearance would be void. The Secretary of State has up to 30 working days (extendable) to decide whether to call in the transaction for a full assessment. The NSI Act regime sits alongside CMA merger control; both may apply to the same transaction.

DMCCA: additional merger control powers

The DMCCA introduced mandatory merger reporting requirements for firms designated as having strategic market status (SMS) under the new digital markets regime. An SMS firm must report qualifying acquisitions where specified share or voting rights thresholds are crossed (15%, 25% or 50%) and the value of consideration is at least GBP 25 million. SMS reporting duties apply only to firms that have actually been designated as having strategic market status. On that basis, they do not appear relevant to this transaction.

However, the DMCCA also expanded the CMA’s general information-gathering powers for merger investigations, which may accelerate Phase 1 evidence-gathering. The CMA’s 2026-27 Annual Plan emphasises a pro-growth approach to merger control, prioritising speed and predictability. A Gamma acquisition may benefit from that orientation, provided the competition analysis is straightforward.

Other regulatory considerations

Beyond the CMA and the NSI Act, parties to a public takeover must navigate several overlapping regulatory regimes. The Financial Services and Markets Act 2000 (FSMA) governs the financial promotion regime applicable to offer documentation. The UK Market Abuse Regulation (UK MAR) imposes obligations on the control and disclosure of inside information and restrictions on dealings during the offer period. The FCA’s Listing Rules, Disclosure Guidance and Transparency Rules, and Prospectus Rules may also apply depending on the form of consideration (cash, securities or a combination) and the listing status of the offeror. If the offeror is itself listed and issues new shares as consideration, reverse takeover provisions under the UK Listing Rules may be engaged.

Commercial implications for channel partners and investors

The immediate commercial question for Gamma’s 3,000-plus channel partners is supply continuity. The channel model depends on long-term wholesale relationships, and any change of ownership raises the question of whether the new owner will maintain, improve or restrict access to the platform. Channel partners should review their existing agreements with Gamma for change of control provisions, minimum service level commitments and termination rights. Where agreements are silent on change of control, commercial leverage reduces once a transaction completes.

For PE investors already active in UK telecoms, the Gamma process is a valuation benchmark. A completed deal at a premium to the current share price would set a valuation multiple for channel-led UCaaS businesses that informs pricing across the sector and signals continued PE appetite for UK communications assets. Investors in competing platforms, including those backing altnet and infrastructure consolidation transactions, will watch the CMA’s approach closely.

Gamma also has existing strategic wholesale partnerships with major UK operators, including a six-year commitment signed in September 2025. If any acquirer with existing connections to those wholesale relationships were to bid, the CMA would need to consider whether the pre-existing commercial ties mitigate or amplify vertical competition concerns.

Viewpoint

The Gamma process crystallises a structural tension in UK business telecoms. The channel model works because it depends on an independent wholesale platform. The moment that platform is owned by a vertically integrated operator, channel neutrality becomes a promise rather than a structural fact. The CMA has the tools to address this through behavioural remedies (access commitments, pricing undertakings) or structural remedies (divestiture of the channel business). But behavioural remedies have a poor track record in telecoms, and the CMA knows it. The more interesting question is whether a PE buyer can offer the same strategic value as a trade buyer while avoiding the competition problem entirely. The answer depends on whether the PE house has other portfolio companies in adjacent markets that create the same vertical incentive, even without a direct telecoms overlap. That is where the CMA’s analysis should focus.

Key sources

Gamma Communications confirms takeover talks, ISPreview, 7 April 2026. Gamma Communications FY 2025 results, Investegate, 24 March 2026. Enterprise Act 2002. Digital Markets, Competition and Consumers Act 2024. CMA2: Mergers guidance on jurisdiction and procedure, CMA, October 2025. Companies Act 2006, Part 28 (takeovers). City Code on Takeovers and Mergers. National Security and Investment Act 2021.

Get in touch

If you are advising on a UK telecoms acquisition, assessing CMA merger control risk, or reviewing channel agreements in light of a change of control, contact Rob Bratby at Bratby Law.