Italian job brings MT to the 4Front

Distribution Memorex Telex buyout strengthens grip on Europe.

4Front Group, the UK distributor and services firm, has bought Memorex Telex Italy from the management and other stock holders for $3.45 million as part of its continued European expansion and diversification plans.

The Nasdaq and Easdaq-quoted company will pay $1.1 million cash for the systems integrator upon completion. Subject to achieving profit targets by July 1999, it will pay an additional $750,000 in cash or 4Front shares.

It will also invest $1.6 million directly into Memorex Telex to fund ongoing operations.

Mark Ellis, president of 4Front, said the company expects Memorex Telex to provide up to $20 million revenue in the 12 months following the acquisition, which will be accretive to earning in the 1999 calendar year.

'The acquisition establishes a foothold in Italy,' Ellis said, adding that 4Front had been seeking acquisitions in Italy for some time. 'We've bought companies in France and Belgium over the past year because we have to be in the larger countries,' he said.

Memorex Telex Italy was part of former Dutch concern Memorex Telex Europe, which fell from grace when it filed for bankruptcy a number of times after 1992 before it began to sell off its worldwide assets in 1996. The German management team conducted a management buyout last year (PC Dealer, 26 November 1997).

Other 4Front acquisitions include the French and Belgian subsidiaries of UK computer hardware maintenance, network support and services company Eurosystems, along with its French networking services unit Netix all for $1.12 million, in October 1997. It also purchased UK hardware maintenance company Firstpoint from Stratagem Group for $6.1 million.