At the end of April, it looked as though Compaq had found the right acquisition to beef up its global services arm when it successfully tendered for the purchase of e-business and services firm Proxicom.
But the last month has seen Compaq's bid beaten hands down by giant South African integrator Dimension Data, the parent company of Australian integrator Com Tech and distributor Express Data.
In late May, Compaq announced it had acquired Proxicom, offering $US266 million to absorb the e-business services firm into its global services division. Compaq planned to make Proxicom a wholly owned subsidiary of its services arm in an attempt to counter similar moves made by its vendor rivals. A week before the offer, IBM purchased US consulting firm Mainspring in an all-cash $83 million acquisition, while a month prior Novell purchased Cambridge Technology Partners for around the same price as Compaq's bid for Proxicom.
But within a fortnight, before the acquisition agreement had been finalised, Proxicom informed Compaq it had received a superior offer. Dimension Data, established in South Africa and now based in the UK, offered closer to $448 million. Proxicom gave Compaq official notice of the "superior bid," giving the vendor three days to match the offer.
But Compaq did not budge. In a statement released the next day, Compaq executive vice president for services Peter Blackmore explained that the vendor was not willing to raise its bid. "Compaq intends to aggressively drive its strategy of expanding our services capabilities," he said. "[But] we don't feel current economics warrant increasing our bid for Proxicom."
With Compaq's decline came the official announcement that Proxicom would become a wholly owned subsidiary of Dimension Data. The acquisition was approved by the boards of both companies, but is still subject to regulatory approval. As part of the termination of the agreement with Compaq, Proxicom has been forced to pay a $10 million break-up fee to the vendor.
Dimension Data has signalled its intention to keep the majority of Proxicom's 1000-strong professional staff on the books, appointing Proxicom chief executive officer Raul Fernandez to the Dimension Data board.