Official: Stone and Viglen deal dead in the water


Official: Stone and Viglen deal dead in the water

Microscope contributor

Protracted negotiations between acquisitive system builder Stone Computers and Sir Alan Sugar's Viglen have come to an end after neither party could agree on the blueprint for a merger or acquisition.

Discussions between the two organisations - the worst kept secret in the channel - began last summer but a number of hurdles have scuppered the plans.

Talking to MicroScope, James Bird, chief executive at Stone Group, said: "I can confirm the deal is off and there is no way forward," but he was unable to comment further.

Bordan Tkachuk, chief executive at Viglen added his confirmation that the deal was off.

Sources familiar with the talks said negotiations reached an advanced stage but the companies were confronted with financial issues that could not be resolved.

Initially, Stone intended to acquire Viglen but it is believed that Sugar then decided to remain with the combined businesses as chairman.

A deal would have created a more powerful British PC builder but the combined volumes would have remained relatively small compared to the likes of HP, Dell and Acer.

Viglen is the last bastion of Sugar's IT empire; following the sale of Amstrad to BSkyB in 2007 he stepped down as chairman of Amstrad last year.

In the year to 30 September 2007 - Viglen's latest audited accounts - revenues dropped nearly 11% to £45.6m, and profits dived 97.2% to £117,276. The firm blamed this on the loss of a contract in Northern Ireland and on the management team's focus on the relocation of the business.

In the 12 months to 31 December 2007, Stone revenues grew nearly 43% to £52.8m as profit after tax rose from £2.04m in the year before period to £3.07m. These results included an £11m contribution from the acquisition of Compusys.

It is believed that Stone will remain on the acquisition trail.

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