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Sherwood accepts Sungard offer

Trading update

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Sherwood International's board has accepted a 140p a share cash offer from Sungard Data Systems which values the UK insurance software company at £65.1m.

Sungard is to combine Sherwood with its own insurance system business. The US company derives more than half of its $2.3bn annual turnover from selling software to the finance sector, with the balance coming from disaster recovery services.

Sungard's takeover is almost a done deal - Sherwood directors and institutional shareholders owning 44.66 per cent have already given irrevocable undertakings to accept the offer which at first sight is not particularly generous for a software and services business.

As of 31 December, 2002 Sherwood had net assets of £34.1m and recorded a profit for that year of £4.6m on sales of £52.2m.

Yes, the offer price represents a premium of 41 per cent to the closing price of 99p on April 28, the day before Sherwood announced preliminary discussions concerning a possible offer and 10 per cent higher than close of play yesterday.

But it appears to take into account difficult trading conditions currently being experienced by Sherwood. In a trading update today, the company reported a number of deferments on licence renewals. It attributes the delays to uncertainty over its future, and not to lost business. This will have a big impact on revenues and and an even bigger impact on profits for the first half. Sherwood expects to recover lost ground in the second half of the year. ®

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