Insight downplays Action bid

Insight Enterprises has revised the terms of its proposed acquisition of Action Computer Supplies, following Action’s share suspension earlier this week. Action shareholders will now receive 0.12 of a new Insight share for each Action share, compared to the previous agreement of 0.16, a 25 per cent drop. But in cash terms, Action shareholders are unaffected -- at least while Insight stock prices hold up. The new deal values each Action share at 264 pence with an issued share capital of £93 million. This compares to a value of 260.7 pence, or £92 million, on May 10, the date the take-over was announced. The reduction came about: "As a result of a material adverse change in trading conditions being experienced by Action," according to a statement by the two companies. "Material and operating conditions have deteriorated materially since the merger was announced, with large customer spending further impacted by a slowdown in ordering ahead of the year 2000." Action said there had been growing pressure on prices, and warned that sales for the second half were expected to be at a similar level to the first half, and therefore "significantly less than prior expectations." The original price put together for the acquisition was based on $26.625 per Insight share on May 7 1999. (See story). Yesterday, Insight's shares closed at $35. George O'Connor, technology analyst at finance house Granville, said: "The deal means Action is worse off – they wanted more, not less, of each Insight share. Action will have a weaker position within the merged company." Action resumed trading this morning after the announcement. Its shares fell 25 pence to £2.50. ®