Formjet plays down conflict fears

Vendor is keen to downplay worries of conflict with partners

Lyndon Chapman: The acquisition of the unnamed U K distributor will not be a problem.

Software vendor Formjet has claimed its planned acquisition of a UK distributor will not ruffle the feathers of broadline partners Northamber and Micro Peripherals (Micro-P).

The Alternative Investment Market-listed firm, which owns the UK rights to the Panda and Ability brands, is engaged in due diligence with an unnamed distributor based in the east of England.

Lyndon Chapman, executive chairman at Formjet, said the move would hand it a ready-made channel to 2,000 additional resellers and improve its logistics clout as it prepares to launch new products.

“This is a very specialist area of distribution and it is unlikely to affect our relationship with our other distributors,” he said.
“We have a number of innovative products in the pipeline and wanted to increase the scale of our operation. If Panda and Ability use this route it will be done on an arm’s-length basis.”

But Jon Atherton, vice president of distributor Enta Technologies, disagreed. “Formjet’s distribution partners will ask questions on its commercial route to channel, knowing that it has a distribution wing.”

Formjet is set to reveal the identity of its target upon closure of the acquisition in mid-August. The mystery firm made a pre-tax profit of £359,000 on sales of £12.6m in its last financial year.

The deal will consist of an initial payment of £400,000 with a further payment of up to £800,000 payable in 2010 based on earn-out targets.

Both Micro-P and Northamber were unavailable for comment.