CHS financial fears rock Vobis takeover of

Wholesale $320 million deal uncertain after share price nose-dives.

CHS Electronics' plan to snap up Vobis and its subsidiaries isives. floundering due to a plummeting share price and concerns that it has overstretched itself and is struggling to finance the deal.

The acquisition of the German retail chain and its sister operations, Maxdata and Peacock, from German parent Metro, had a price tag of $320 million, $295 million of which was to be cash and the rest stock (PC Dealer, 15 July).

However, CHS' share price crashed 24 per cent last week following a steady decline from its $30 mark when the deal was announced, to its current level of trading of about $6.56.

Fuelling concerns was Metro's refusal to comment on German reports that Gert Huegler, ex-chairman of Vobis, who left when the takeover was unveiled, had been reappointed.

The recent cash and stock acquisition of telecom distributor Brightstar and April's $87.7 million takeover of Metrologie are also cited as being behind CHS' financing problems.

But Peter Rigby, director of marketing and communications at CHS, insisted: 'The acquisition is still going ahead. Our latest quarter sales were strong at $2.2 billion. Our share price is not what it was a few months ago, but that's more a reflection of the market.'

Claudio Osorio, chairman and chief executive of CHS, claimed: 'Our current stock price is inexplicable in light of our recent results and balance sheet position.'

He added that CHS was aware of the rumours, saying: 'We expect to make an announcement soon.'

Brian Pearce, European channel analyst at IDC, commented: 'The question is whether the deal will go through 100 per cent. CHS needs something to push its white box programme, to keep up with Ingram Micro.'

Jeremy Davies, senior analyst at Context, added: 'Back in July CHS was so strong, but the global crisis has really hit technology stocks. The Vobis staff changes are significant. With such a drop in stock you've got to ask what CHS will be able to bring to the table.'