Computacenter 'preps £250m Synstar bid'

Not one of our rumours


Shares in Computacenter jumped five per cent yesterday on market speculation that it was preparing a £250 million bid for Synstar, Europe's biggest IT maintenance firm. According to The Times, the paper that likes to be known as journal of record, Computacenter had also "informally explored a merger with its rival Compel, but decided against it". Computacenter already operates a substantial maintenance business of its own, in the UK. Synstar's tentacles spread into Germany and France (where Computacenter has subsidiaries) and other European territories. Is the Times story true? We'll find out soon enough, if it smokes out a statement to the Stock Exchange from Computacenter. No statement = no truth. And what about the Compel informal merger talks splash? Computacenter's CEO, Mike Norris, has publicly stated his regard for Compel and its boss, Neville Davis. However, there is limited upside to be gained from merging with a company that does more or less the same things but is less than a fifth of its size. Granted, Compel would bring midrange thump and leasing revenues stream through its Hamilton Rentals business, but the downside is that half Compel's customers could jump (if such a merger were ever to take place). Synstar looks more of a goer -- it brings new revenue streams, new customers and enhanced geographic coverage. There is also some scope for cost-savings, by pooling Computacenter's UK maintenance operations with Synstar. The Times refers to Synstar's "high-margin" business -- a unusual concept for the highly commoditised third-party maintenance sector, we think. Synstar is also big into disaster recovery -- one of the less price-sensitive areas of the IT market. (Corporates haggle like crazy when they're buying hardware and then they're led like lambs to the slaughter to disaster-recovery cum insurance policy rooms). ®


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