Founders plan Computacenter buy-out bid

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Peter Ogden and Philip Hulme, two of the UK’s most successful technology entrepreneurs, are planning a management buy-out of Computacenter, the computer hardware company they founded 24 years ago.

Mr Ogden, Computacenter’s largest shareholder with 23.5 per cent of the stock, is leading a group of senior executives who collectively control 44.2 per cent of the company. A preliminary approach was made to the board on November 9.

News of the approach emerged yesterday after Computacenter’s shares rose more than 6 per cent to 214½p, valuing the company at £408m.

Talks between the management team and company are still at an early stage, and no definitive offer is on the table, but industry observers suggested a bid for Computacenter could be priced at around 250p. This would value the company at £472.5m.

The price would be less than half of Computacenter’s £1.3bn valuation when it floated on the London Stock Exchange in 1998.

The one time stock market darling has recently suffered from rapidly falling prices and increasing competition in the computer hardware sector. In particular it is struggling to adjust to tightened terms of trade from Hewlett-Packard, its primary vendor, which is losing market share to Dell.

Computacenter shares have lost some 50 per cent of their value in the past 12 months following three profits warnings. In September the company reported a 73 percent drop in first-half profit due to weak demand and stiff competition.

In response to the decline in the hardware sector, Computacenter has been looking to increase its services business, but has failed to do so fast enough. Efforts to turn around its struggling businesses in France and Germany have similarly proceeded slower than expected.

Mr Ogden and Mr Hulme founded Computacenter in 1981, coinciding with the launch of the personal computer industry by IBM. The pair pocketed a collective £64.3 from the 1998 public offering – a majority of which was donated to charity. Mr Hulme went on to sell a further £13.4m worth of shares last year. However, both men have remained the largest shareholders in the company.

The other members of the management buy-out group include Ron Sandler, chairman, Mike Norris, chief executive and Tony Conophy, finance director.

HSBC Bank is advising the independent committee of the Computacenter board – consisting of Nick Cosh and Cliff Preddy, independent non-executive directors. Goldman Sachs is advising the management buy-out group.

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