EDITORIAL - No birds, no planes and no deal

When a comic book superhero is in an impossibly tight dilemma and there is almost no possibility that he or she can get out of it, there is always that old standby line - 'With one mighty leap, he was free'.

No matter how unfeasibly trussed up the hero is, an effective escape is then achieved.

This looks very much like the situation that CHS Electronics now finds itself in after the Vobis acquisition was aborted. CHS is in a corner and, no matter how much the unflappable president Claudio Osario may make light of the situation, it is not a happy one for the distributor.

It may well be the end of the current period of mergers and acquisitions that has very nearly destabilised the channel this year, but CHS shares have plummeted so low that there is now speculation in some quarters that the distributor is ripe for buying.

However, I don't think CHS is in any mood to sell - shares are very liquid again, particularly after the decision not to buy Vobis.

The idea that the takeover fell through because CHS just couldn't get its head around the retail market does not ring true. We are not talking about a minor player here - the idea that it went to the table with a faulty business plan is just not tenable.

The global economic uncertainty is certainly a main reason for the deal falling through. There also seemed to be uncertainty about whether all the conditions had been met by Vobis parent group Metro - and it is Metro which is claiming that the reason for the collapse of the acquisition was the CHS share price drama.

With a share price of $6.56, the fall from $30 is a particularly hard one for the company. That's maybe why there is so much sensitivity at the distributor about the collapse. Not that there need be - CHS' share price will climb quicker than Vobis', which has clearly been damaged by the deal being called off.

The suggestion that Metro didn't meet all of its conditions is the most intriguing one. Very few deals fall through after the ink has dried on the final settlement and, when that happens, it usually costs the company that pulls out dearly.

So there is the potential for a damaging legal battle which will do no one any favours and could cost CHS millions of dollars.

The millennium bug has given me some light relief this week. A press release jointly signed by transport minister John Prescott and Sir Jeremy Beecham is asking local councils to take a year 2000 pledge.

This particular promise has something of a desperate edge to it.

Back in March, Prescott and Beecham asked councils to make 'personal commitments' towards ensuring that their year 2000 problems had been fixed and to sign Pledge 2000.

Because there has been a deafening silence from the councils since then, the call has had to go out again. No mention is made of how many councils have signed up, but I would take a wild guess that very few have actually done so.

Any Var that thinks it is worth the lofty title of systems integrator could prove it by approaching its local council and finding out if there is some work available. If it's signed Pledge 2000, take the work, but if not ...