Insight deal no big deal, says Action man
Lewis claims future is still positive despite acquisition set-back
Action Computer Supplies said it would not be courting more suitors after getting dumped by its US beau this week. Henry Lewis, Action's chairman, told The Register there was a sense of relief at the reseller now that prospective US buyer Insight Enterprises had finally walked away from the deal. And he stated that the company was definitely no longer up for sale. "We look like a rejected bride," said Lewis, but maintained that it would be business as usual at the Middlesex-based reseller. However, Insight's withdrawal has not taken all the pressure off Action. Arbitrageurs, who snapped up Action stock before the Insight deal was called off, still own around 30 per cent of the company, according to Lewis. Investment experts in the City expect this to force the share price down further. George O'Connor, analyst at investment bank Granville, said: "There are strong grounds for Action's shares to come under pressure as arbitrageurs sell shares to longer term Action investors." "These arbitrageurs are currently looking at a loss, and need to decide whether to grin and bear it or hold onto the stock for a better price," he said. Insight's decision to walk away from buying Action ended months of uncertainty, not helped by the US giant reducing its offer price for Action. It eventually terminated the deal after Action announced poor preliminary financials for the year ended 31 August. But Lewis insisted the company would not be hurt by the arbitrageurs' holding. "They are not interested in running the business -– they want to make a margin," he said. "They will be offloading the shares, but not just at any price. They know Action is well funded and has no liquidity problems. "And as they sell, the long-term shareholders will soak up their shares." According to Lewis, the 30 per cent represents around 10 million shares. He said four million of these shares had been sold yesterday, with the exit of one main arbitrageur. He insisted that the company was on the up. "We have taken significant initiatives in the last year to push the business forward," he said. This included implementing a new IS system, and hiring 83 telesales staff for its web business this summer. He described the whole buy-out process as "pretty fatiguing and very distracting", but maintained his company had not been dependent on the deal. "Our first priority is to get our profit and growth back to speed. Then we have to get through Y2K," said Lewis. But he said the company expected to feel a recovery period next February. Action's shares were down slightly at 72 pence today, after rising 5.5 pence yesterday to close at 73.5 pence. ®
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