Financial woes fail to deter Compel suitors

Compel has not gained any breathing space from its hunters despite an industry downturn which has also forced Computacenter to issue a profit warning.

Compel has not gained any breathing space from its hunters despite an industry downturn which has also forced Computacenter to issue a profit warning.

An analyst who asked not to be named said Computacenter's poor results will not affect its bid to take over its embattled rival. Computacenter's £85m bid for Compel was spurred by the reseller's profit warning.

"This won't affect its bid. Computacenter is still financially strong, with substantial assets. The core strength of its business is unaffected," said the analyst.

He expressed surprise that Computacenter had not been "shielded to a larger degree" by its diverse interests, but said it underlined that there is a downturn in the industry and that everyone is having a lean time.

The downturn is also likely to have affected Specialist Computer Holdings (SCH), which last week confirmed that it has held discussions with Compel which "may or may not lead to an offer".

"If Computacenter is feeling the pinch - and Compel is - then you would expect other players to be affected by the same market conditions," said the analyst.

SCH, the major shareholder in Compel with 11.4 per cent, issued the statement last week after Compel denied that it had approached SCH and its founder, Peter Rigby, about acting as a white knight. Compel, which has repeatedly insisted that it can continue as an independent entity, confirmed that no proposal had been received.

The analyst agreed that while Compel remained vulnerable, the company could survive the takeover bid if Computacenter and SCH were not more aggressive. "Compel is vulnerable, but it remains to be seen just how vulnerable in terms of its shareholders. Unless someone comes in aggressively, I believe that Compel can and will maintain its independence," he said.

First published in Computer Reseller News