Computacenter buy-out talks terminated

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Sir Peter Ogden and Philip Hulme, the founders of Computacenter, have called off buy-out talks after it emerged that the computer hardware and services company had seen a sharp improvement in trading in December.

The pair had launched informal talks to take the company private in November, when a series of profit warnings had left the shares languishing at about 200p.

Sir Peter and Mr Hulme, who founded the company 24 years ago and control more than 44 per cent of the stock, were understood to have made an informal offer of 255p a share – or £485m – for the company. However, this was rejected by the independent directors.

An upward revision in annual profit expectations by the company on Thursday left little hope that the two sides could agree a price and the management-backed buy-out team opted to terminate talks.

Mike Norris, chief executive, said Computacenter had seen a rush of orders for big ticket items such as corporate servers at the end of the year. This is expected to lift pre-tax profit for 2005 to between £32m and £34m, materially ahead of market expectations of about £25m.

Mr Norris said improvements had come across the board, in the UK as well as the long-troubled French and German operations. Germany is expected to make a small profit of £3m to £4m for 2005, although France will remain in the red.

Computacenter shareholders said the trading uplift showed that the independent directors had been right to hold out for a higher price.

“It would have been sad to have the company go private at the bottom of the cycle,” one shareholder said. “Now we can participate in the upside.”

Another shareholder said the long-term value of Computacenter shares could be around 400p, far in excess of the informal offer. Nevertheless, shares in Computacenter fell 13¾p to close at 241¼p on Thursday. In the absence of a buy-out, investors said they expected the company, which had £87.3m in cash at the end of June, to return some of this money to shareholders.

It is thought a pay-out could be around 80p a share.

A further announcement on capital restructuring is expected on March 14 when Computacenter reports full-year results.

The company is also expected to strengthen its non-executive board following investor concerns only two independent directors had been left to handle the management buy-out offer.

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