Online resellers deny takeover rumours

Two of the UK's biggest mail order and online resellers were the subject of takeover speculation last week as Action Computer Supplies rejected a bid from an unnamed suitor, and Computer Warehouse denied that it is up for sale.

Two of the UK's biggest mail order and online resellers were the subject of takeover speculation last week as Action Computer Supplies rejected a bid from an unnamed suitor, and Computer Warehouse (CW) denied that it is up for sale.

The Action board was obliged to consider any offers, said Henry Lewis, its chairman, but had rejected this latest bid on the basis that it "substantially undervalued" the company.

Lewis would not comment on the identity of the suitor and said he has no idea if the bidder will make another offer. Sources have linked retail group Kingfisher with Action.

In October 1999, US giant Insight Enterprises walked away from its proposed takeover of Action, blaming poor profitability. Two months ago, Action revealed that the cost of restructuring its business around the internet would push its loss for this fiscal year to about £6m.

Fellow mail order reseller CW said last week that it is seeking an external source of investment to dramatically increase its web sales, but claimed this does mean the company is up for sale.

Jonathan Cole, a director at CW, said floating its online business was one option under consideration. "We're growing our online sales at about 18 per cent a month but are looking around for ways of getting to the next level," he said. Cole would not comment on whether he had received offers from potential buyers.

CW is planning a 'QVC-style' shopping channel, which it will build into its website. The channel is being developed by BwebB, of which Cole is a director, as is entertainer Robert Llewellyn, who played Kryten in TV's Red Dwarf.

Cole said that BwebB uses technology that can deliver high-quality video over a 56Kb modem, adding that CW, which claims to be the UK's largest Apple reseller, has already expanded its product line to include Sony Viao and Handspring personal organisers, and is looking to move further into consumer electronics.