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Insight downplays Action bid

Action weaker, Insight stronger as shares resume trading

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Insight Enterprises has revised the terms of its proposed acquisition of Action Computer Supplies, following Action’s share suspension earlier this week. Action shareholders will now receive 0.12 of a new Insight share for each Action share, compared to the previous agreement of 0.16, a 25 per cent drop. But in cash terms, Action shareholders are unaffected -- at least while Insight stock prices hold up. The new deal values each Action share at 264 pence with an issued share capital of £93 million. This compares to a value of 260.7 pence, or £92 million, on May 10, the date the take-over was announced. The reduction came about: "As a result of a material adverse change in trading conditions being experienced by Action," according to a statement by the two companies. "Material and operating conditions have deteriorated materially since the merger was announced, with large customer spending further impacted by a slowdown in ordering ahead of the year 2000." Action said there had been growing pressure on prices, and warned that sales for the second half were expected to be at a similar level to the first half, and therefore "significantly less than prior expectations." The original price put together for the acquisition was based on $26.625 per Insight share on May 7 1999. (See story). Yesterday, Insight's shares closed at $35. George O'Connor, technology analyst at finance house Granville, said: "The deal means Action is worse off – they wanted more, not less, of each Insight share. Action will have a weaker position within the merged company." Action resumed trading this morning after the announcement. Its shares fell 25 pence to £2.50. ®

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