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CHS Vobis deal collapses

Says Metro AG failed to meet conditions

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CHS stock has inched upwards following the collapse of its Vobis takeover deal. In an interview with Techweb, CHS chairman Claudio Osorio blamed the collapse of the deal on Vobis owner Metro AG's failure to meet certain unspecified conditions. Far more likely was CHS Electronics' inability to find a buyer for the lossmaking Vobis retail chain, which had been bundled with PC assembler Maxdata and distributor Peacock, the Metro businesses CHS actually wanted. Coupled with CHS' bombed out share price ( at a 52 week low last week), the deal looked increasingly unviable. CHS offered Vobis parent Metro $320m in cash and stock and another $340m in assumed debt, but according to German reports last week, Metro had begun to prepare an IPO for Maxdata. Following the collapse of the Vobis deal, CHS Electronics' European channel assembly strategy lies in ruins. Failure to complete is also a major embarrassment for CHS -- whatever it says. For it raises question marks over the company's ability to raise capital for future acquistions. In future, prospective acquirees will be much more interested in the folding stuff upfront than jam tomorrow in the form of CHS-denominated share lock-ins. ® On Friday, Osorio claimed in a statement that the acquisition of Vobis "is not closed." He added "the deal has not fallen apart and we are still negotiating." The distribution giant stock plunge to a 52-week low this week as its proposed take over of German firm Vobis lies in ruins. CHS stock was valued at $6.375 today on the New York Stock Exchange, down from $7.31 last Thursday. A year ago the stock stood at $30.75. The company had a brief respite last week when its shares rose following the take over of US mobile phone distributor BrightStar. The current instability in the CHS stock price appears to be a direct result of the uncertainty in the Vobis deal, despite CHS financial officer Craig Toll's claim that it is a result of an unstable European economy. One US analyst said that the longer it goes on and no deal is signed, the more investors start to get edgy and wonder whether or not CHS can actually get the capital for an acquisition. CHS offered Vobis parent Metro $320m in cash and stock and another $340m in assumed debt, but now Metro is reported to be reluctant to include Vobis subsidiary Maxdata in the deal and is considering a public stock offering for the company. Despite all this, CHS is on course for a set of healthy of results, according to the company. CHS is expecting to close the year with $100m in post-tax earnings on sales of $8.5bn. ®

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