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August 22, 2005

Phones4U founder sounds out market over possible sale

According to various reports in the UK media, John Cauldwell, the co-founder of mobile phone retailer Phones 4U, is looking to sell the company.

By CBR Staff Writer

Caudwell is understood to have recruited investment banker NM Rothschild to gauge market interest. It is thought that Rothschild will be sounding out mobile operators looking to increase their retail spread, as well as venture capital funds seeking new investment opportunities. Suggested prices vary between GBP800m ($1.44bn) and GBP1bn ($1.8bn).

Caudwell is considered something of a controversial figure, and once famously banned his employees from using email. His autocratic style of management has reportedly resulted in a stream of executives leaving the group, and he is also no stranger to the court room.

This year Caudwell was forced to close Discovery Store, a chain of gift shops he bought from a receiver. In July he lost a three-year fight with the UK Inland Revenue over using an offshore trust to avoid or defer tax. The decision means that Caudwell Holdings faces a GBP13m ($23.4m) bill.

He has also faced mis-selling allegations, after staff at a subsidiary were accused of passing themselves off as BT staff. Indeed, BT has just accepted GBP150,000 ($270,554) in damages and costs over the mis-selling claims from Caudwell Communications Ltd, a sister company of Phones 4U.

However, there is little doubt that Caudwell is one of the retail mobile phone pioneers. He founded the business with his brother Brian in 1990. He is now the UK’s 26th richest man, with a fortune of GBP1.3bn ($2.34bn).

In August 2003, he disposed of part of the business with the sale of Singlepoint 4U Ltd, the company’s customer billing unit, to Vodafone Group Plc for GBP400m ($721m).

Privately held Phones 4U is competing against Europe’s largest independent mobile handset retailer, The Carphone Warehouse Group Plc, which is the UK market leader. According to the Daily Telegraph, the company has so far refused to comment on speculation and market rumors and has rejected suggestions that the business is experiencing a bumpy time.

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Phones 4U did not respond to ComputerWire’s request for comment.

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