UK IT services giant and systems reseller, Computacenter, is locked in negotiations over the future of the company that look likely to end in a management buyout. Such an outcome would give the beleaguered company much needed breathing space to restructure, away from the harsh glare – and short-term focus – of the stock market.
Plans for a MBO were first floated in early November 2005, when co-founders Sir Pete Ogden and Philip Hulme launched an offer valuing the vendor at around £485 million.
That valuation is well below the levels of its 1998 floatation, but since then market conditions for technology firms have worsened considerably, and Computacenter has racked up a string of disappointing financial results that have seen its stock price fall. If the MBO does not go through, there is a possibility that it could be delisted from the FTSE index.
Even so, an independent committee established to evaluate the offer rejected the initial approach. MBOs are notoriously difficult to evaluate – the management board are in a strong position to assess what a realistic price should be, and that make it much harder for independent assessors to ensure that the price is fair.
At the time of going to press, no outcome had been finalised, although market watchers believed it was a case of ‘when’ not ‘if’ a deal would be reached. “The most likely outcome will be a face-saving marginal increase hammered out over the weekend so that the non-execs can say they did not cave in to the first bid,” said Richard Holway of analyst Ovum Holway.
“A few years out of the public eye would be good for Computacenter,” continues Holway. “It needs to take actions which, with the best will in the world, you just can’t do as a listed company. Just think what would happen to the share price if Computacenter announced that it planned two years of losses whilst it sorted out the business and moved it firmly into the infrastructure/managed support area.”