ComputerCorp and S Central pull the plug on acquisition
- 03 September, 2009 10:34
The merger between ASX-listed ComputerCorp and S Central is off.
According to an ASX statement, delays in progressing the acquisition has resulted in the board’s decision to pull the plug on the deal. The deal comes just days after ComputerCorp announced a full-year loss of $1.05mand a couple of weeks after S Central founder, Peter Mavridis, stepped down as acting ComputerCorp CEO.
The company did not elaborate further on the reasons for the termination of the agreement. However, ComputerCorp has revised its non-renounceable rights issue down to $2 million, in line with capital requirements, and extended it by a further four weeks.
ComputerCorp reiterated its commitment to the acquisition of Synergy Plus and said it had already made two payments towards the purchase.
ComputerCorp chairman, Domenic Martino, said the pair had been unable to reach an agreement on terms. The company would continue to search for acquisitions to help boost its reach and was actively involved in discussions, he added.
Acting CEO, Peter Cappendell, will continue to oversee the company in the interim while ComputerCorp either looks for a full-time CEO, or makes another acquisition.
“We are clearly on the acquisitions trail – just look at Coretech, Synergy and Paragon,” Martino said. “ComputerCorp and S Central were kept separate while the deal was being pursued. The terms of the deal were difficult to reach.
“I’ve been in M&A all my life – this is par of the course. You need to get two partners to agree.”
S Central owner, Peter Mavridis, said it was unable to get the deal over the line with shareholders. He also hinted at cultural differences between the two organisations.
“At the end of the day, we delayed the transaction a couple of times because [S Central] shareholders didn’t approve it. That was still the case, so the ComputerCorp deal couldn’t proceed,” he told ARN. “With M&A, everyone knows there’s lots to fit including cultures and in the end, it didn’t work out.
“S Central is a services business and that’s our culture. Moving from a hardware to services mentality is not easy to do for any organisation.”
Mavridis said S Central had grown organically by 33 per cent year-on-year and insisted it was in a good position going forward.
“We’ll be continuing with our growth plan and look at more M&A activity,” he said.
S Central recently appointed industry veteran, Michael Lapman, as COO to assist running day-to-day operations while Mavridis focuses on its business strategy.