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InterX sells Ideal Hardware for £18m

Abandons Pharmweb deal for 'leveraged investment'

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Timing is everything, as today's disposal of Ideal Hardware, a leading UK IT distie shows.

Owner InterX is flogging its once core business to Bell Microproducts for the princely sum of £18 million cash, £5 million of which is deferred until March 2001. And £2.7 million of that will end up straight in the maw of Inland Revenue, to settle the tax bill created by the departure of Ideal Hardware from the group.

InterX also retains the freeholds of Ideal's headquarters and distribution facilities in Chessington, Surrey, and has granted Bell the right to buy these for £16 million by October 2000.

The price extracted from Bell, a big US distie, for Ideal Hardware looks disappointingly low for a company that turns over more than £300 million and PBT of £6 million annually, and a company with net assets of £13 million.

But the sale has been a long-time coming - InterX has touted Ideal, the company from whence it sprang and the contributor for all its profits) in public since November last year. And sentiment has turned strongly against IT hardware distribution stocks.

A couple of years ago, InterX could have expected to have sold Ideal for £100 million, no trouble. Earlier this year, the company would have been satisfied with £60 million. Now it is walking away with just £30 million or so, net, in its pocket. It will spend the proceeds on developing InterX Technology, developer of Bladerunner, a wannabe competitor to Broadvision.

PharmWeb

InterX is not very good running content businesses, as displayed by its experience with the IT Network, recently bundled into ComputerWeekly.com, a Reed-Elsevier business in turn for a 25 per cent stake in the enlarged company.

Failure to ignite the world with the IT Network is probably a key reason for the company's decision to abandon takeover talks with Pharmweb, a pharmaceutical database, which it had announced in March it was buying for £20 million in cash and shares, as well as injecting £10 million in working capital.

It is stumping up £4 million instead for a 37.5 per cent in Diligenti, an B2B consolidator in the life-sciences sector. Crucially, it will migrate Diligenti's technology to the Bladerunner platform. But Pharmweb has not been left completely in the lurch - Diligenti is replacing Inter at negotiating table.

InterX is making available a convertible term loan facility of up to £16 million, presumably to help Diligenti complete a stack of acquisitions in the sector (three are mentioned in InterX's statement to the London Stock Exchange). Following the purchases, InterX's share in the firm is expected to fall to 15 per cent.

Scaling back

In March at the height of the market for tech stocks, InterX shares hit an incredible £38. For a brief
moment, it looked like the company could turn itself into a big-time new media publishing house, as well as a software developer. But timing is everything - now the company has scaled back to concentrate solely on its software business. This looks sensible.

Investments in other companies are now made mostly to secure new licences for Bladerunner. They are what InterX calls "leveraged" - in other words, it will sell stakes in Diligenti, Computerweekly.com and whatever comes along its way in future, when the time is ripe. ®

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