Is Misco gearing up for a sale?
EMEA Technology Group dissolved today, but Misco insists move is insignificant
Misco has said Systemax's decision to dissolve its EMEA Technology Group is simply "good corporate housekeeping", rebuffing conjecture that the move is part of a plan to sell the business.
Systemax's EMEA Technology Group Limited - home of Misco, Inmac and WStore - was dissolved today, according to Companies House documents - completing a process to strike it from the register which began at the end of October. Misco UK Limited remains unaffected.
The EMEA Technology Group's accounts posted in November 2015 say that on 1 August 2015, a group reorganisation meant that Systemax's EMEA Technology Group ceased trading, and certain staff and contracts were transferred to Misco UK Limited, which continues to trade as normal. Since then, the entity published only an annual return, before starting proceedings to dissolve the company in October - a process which finished today.
In a statement, Misco said nothing should be read into the decision to dissolve the company.
"This is old news as the process to dissolve a company takes some time," it said in a statement sent to CRN. "On 20 October 2016 we filed an application to strike this company off, with the next step being notice of this published in the London Gazette. This happened on 1 November.
"As with every application of this kind, Companies House then wait at least two months before completing the strike-off, to allow any objections to be filed. The strike-off was completed today.
"This action was simply good corporate housekeeping - we made the decision to strike the company off as the legal entity was not being used anymore and to keep an entity going there are cost implications - primarily administrative - for example, legal, accountancy and audit.
"It's also worth noting that to be struck off, an entity has to have been dormant for some time."
Sale soon?
But one industry source disagreed, and said it likely forms part of a "cleaning-up" process prior to a sale. The source said that although the timing of the dissolution is not significant in itself, it likely forms part of a wider plan.
"Based on the finances in the US, I think it's incredibly likely that this is a precursor to a structural change which would enable it to sell without certain liabilities and assets included in the sale," said the source. "A company such as Systemax will have complex inter-company trading and liabilities and these things are often done to clear things up ahead of a transaction."
Other sources CRN spoke to also said the closure of the company is probably not significant alone, but suggestions that the company is up for sale surprised few. CRN understands that the process to sell the firm is being conducted among a very small circle of people.
In 2015, Misco parent Systemax closed most of its retail outlets in the US, focusing on its B2B arm instead. This followed its move in 2014 to buy SCC's Dutch arm.
Misco's UK performance has caused a headache for Systemax in recent years and a number of its senior staff, such as former UK boss Tony Brooker and sales boss Gary Remmington, have left over the past few months.
Revenues for Misco UK's year ending 2 January 2016 fell by 23 per cent to £219.4m, while operating losses widened to £8.5m, compared with £5.6m a year earlier.
In the director's report in Misco's accounts, available on Companies House, it claims the UK is the "cornerstone" of its European operations.
"Systemax believes that the UK business is the cornerstone of Systemax's business in Europe and considers that the success of its European operations is depending on a successful UK operation," the report said. "The company's business had been successful from an operating profit level up to 2010 and the aim is that the company can return to similar levels assisted by the commitment of Systemax's management."