Insight sets sights on Action – again
Insight Enterprises, the US direct marketing IT reseller, is poised to buy Action Computer Supplies, UK's biggest mail-order reseller, according to the Financial Mail on Sunday.
"The final terms are understood to be all but sealed and Action's board, headed by chief executive David Palk, is expected to announce a deal within two weeks," the paper reports.
Today Action confirmed that it was in "advanced bid talks" with an unnamed company. On the table is an offer valuing Action at "no more than 80p a share". Action's shares advanced 6p to 71p this afternoon on the news. At 80p, Action will be valued at £26.5m approx - maybe 10 per cent of turnover.
On 18 July, Action announced that it had received an approach that could lead to an offer for the company. This followed rises in its share price - currently the company is capitalised at £20m - in April the company was valued at £6m.
In 1999, Insight cancelled plans to buy Action, following a rapid deterioration in trading reported by the UK business during the due diligence period.
Once humiliated, twice desparate
Since then Action has effectively been up for sale- although not at any price. In August 2000, the Action board announced that it a rejected a conditional offer for the company which was it felt undervalued.
However, the market has torpedoed since then: In June 2000 Action had issued a sales and profits warning, in which it forecast full year losses of £6m.
The fact that Action is prepared to climb into bed again with Insight shows the company does not want to risk getting past its sell-by date.
Where in the World
The one surprise - assuming that the Financial Mail on Sunday's information is correct - is that Dixons Stores Group is not fighting harder for Action.
In April, the Financial Mail on Sunday - again reported that Dixons was sniffing around Action. This prompted Action's board to deny that it had received a proposal to buy the company. Yes, but it would be very surprising if the pair were not talking.
Dixons, the UK's biggest computer retailer, is gunning for a top five position in the UK business market too. With Action under its belt, the company could attain this goal much more quickly.
An Insight-owned Action Computer Supplies will be a much more formidable competitor. ®