Fayrewood recommends SCH offer

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Fayrewood recommends SCH offer

Paul Kunert

SCH has had a £2m bid for Birmingham-based Interface Solutions and Systems Loans Services (SLS) accepted by the board of parent company Fayrewood, subject to shareholder approval.

The Fayrewood board has made irrevocable undertakings to vote in favour of the offer to be proposed at the EGM in respect of more than 10 million Ordinary shares, representing 44.5 per cent of the issued share capital.

The companies had been locked in negotiations, as revealed by MicroScope on 23 June, which has now led to an SCH offer of £976,000 paid on completion of the sale. Two further cash payments of £500,000 will be paid within 12 months of completion, subject to potential warranty claims.

In a statement to the City, the board at Fayrewood said it was "unanimously in favour of the disposal" as it maximised shareholder value and represented the final stage in breaking up the IT group.

James Rigby, managing director at SCH sent a statement to MicroScope confirming the offer, "it is a cracking deal and have got our fingers crossed that it goes through."

Interface employs 130 staff and SLS operates with two full time employees.

The acquisition will give SCH the much sought after IBM distribution business at Interface, the x86 server franchise with Sun and a contract with Lenovo, among several others.

Background

In 2005, the Fayrewood board believed the net worth of the businesses in the IT distribution group exceeded the then market cap and to realise that value it decided to sell the component parts.

This strategy started with Fayrewood disposing of its stake in Computerlinks AG in Germany followed by the sale of Spanish distributor UMD SA in December 2006. Divesting in both allowed Fayrewood to return £35m in cash to shareholders in June 2007.

In December 2007, Paris-based Banque Magnetique SA was sold leaving Fayrewood with only Interface Solutions and less known SLS which manages the loans of IBM X-series servers to customers on behalf of the vendor.

The saga over the two remaining IT businesses at Fayrewood has rattled on for more than seven months and a number of UK distributors have looked at the books to determine if they were interested in splashing the cash.

It is believed that CCD got very close to buying Interface but pulled the plug at the eleventh hour because the numbers did not add up.

In the year to 31 December 2007 Interface made a £571,000 loss on the back of revenues of £130m. This compares to a £839,000 profit and £122m revenues a year earlier.

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