Feeds

Insight walks away from Action takeover

Share price plummets as long awaited deal falls through

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

Insight Enterprises has scrapped its plans to buy Action Computer Supplies, causing Action's share price to plunge 60 per cent. The US company today said it had ended the agreement to buy the Middlesex-based reseller "in light of a deterioration in Action's operating results". In a statement to the stock exchange, it also blamed "the difficult near term trading conditions to which Action is exposed, particularly with the Millennium year end still to come". Action was told on Friday that the Insight board would not be able to recommend the deal to the company's shareholders. As reported here, Action then asked for its shares to be suspended pending a further announcement. As part of the proposed deal, Insight had the right to stop proceedings if the merger was not completed by 31 December 1999. On Friday, Insight stated it did not want to renegotiate or extend the agreement. Action today also announced an expected drop in pre-tax profit before exceptionals to £2.2 million, from £7.1 million last year, in its preliminary results for the year ended 31 August 1999. In the unaudited estimate, sales were forecast to increase to £276.6 million, from £249.6 million. Action said net exceptional items totalled £300,000, made up of £800,000 of costs from the proposed buy-out and £500,000 of recovered tax. Henry Lewis, Action chairman, stated that the board of Action was disappointed with the decision, saying Insight had acted ignored the long-term benefits of the deal. "In our opinion, the effects of recent short term weakness in the United Kingdom IT market should not have outweighed the strategic benefits of the merger." According to Lewis, spending from Action's biggest customers were continuing to fall below historic levels, reflecting companies' Y2K planning. But he said he expected "a gradual recovery during the first quarter of the New Year, with a consequent return to satisfactory trading for the company as a whole". Action saw Web sales continue to rise, up 37 per cent to £26 million for the year to August. It also said it would be launching a new Web site this month to encourage customers to use ecommerce. Action's shares dropped 112.5 pence to 65 pence in the first one and a half hours of this morning's trading, after being restored to the listing at 7.55 am. In July, they peaked at over 300 pence. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
BT said to have pulled patent-infringing boxes from DSL network
Take your license demand and stick it in your ASSIA
Right to be forgotten should apply to Google.com too: EU
And hey - no need to tell the website you've de-listed. That'll make it easier ...
prev story

Whitepapers

Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Reducing the cost and complexity of web vulnerability management
How using vulnerability assessments to identify exploitable weaknesses and take corrective action can reduce the risk of hackers finding your site and attacking it.