Compel target for takeover after shares crash
The tables were turned on Compel last week when the acquisitive reseller itself became a target for takeover after it issued a shock profit warning causing its shares to crash.
The tables were turned on Compel last week when the acquisitive reseller itself became a target for takeover after it issued a shock profit warning causing its shares to crash.
Rumours abounded this week that rivals Specialist Computer Holdings (SCH) and Computacenter might make a bid for Compel after Peter Rigby, SCH founder, bought 3.5 million shares in the embattled reseller.
Compel announced last week that a "lower than anticipated upturn following Year 2000 lockdowns" by Compelsource, its desktop outsourcing division, would hit its full-year results. The warning came just three months after an upbeat trading statement which reported healthy sales and a strong flow of contracts. The Compelsolve and Hamilton Rentals divisions are performing well.
The reseller also announced that Mark Howling, managing director of Compelsource, had "felt his position untenable" and resigned and would be replaced by chief executive, Neville Davis.
Compel said it will reorganise into three divisions: Compelsource, Compelsolve and Hamilton Rentals, for which it will incur restructuring costs. It currently has six businesses.
But the reseller said its overall prospects remain "good" and Davis insisted he can "turn the company around". However, the warning almost halved Compel's value and cast serious doubts over its future.
Chris Jones, an analyst at Canalys, said: "It is unlucky that Compel has to deal with mergers, Year 2000 and change in management at the same time, but Year 2000 slowdown and its hangover were most probably the major reasons behind the warning."
Analyst Richard Holway said Compel had been in a "state of denial" about how fast post-Year 2000 demand would ramp up and that "reality has intruded rather painfully".
Another analyst said: "I think it's just an overreaction by the market as usual." But he agreed that a takeover of Compel would provide SCH with a cheap way to list on the stock market.
First published in Computer Reseller News