Comac to buy rival agency for 18.5m pounds

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The Independent Online
COMAC, the information technology consultants agency, is buying its fellow agency Computer Search and Selection for pounds 18.5m in a deal designed to forge the dominant British player in the business.

Philip Swinstead, chief executive and controlling shareholder of Comac, aims to repeat his success at SD-Scicon, the software systems company that he built into one of the dominant players in its market until the hostile takeover by EDS in 1991.

'The information technology industry is identical to the software market in the late 1970s and early 1980s,' he said. 'It is fragmented, but now big companies want preferred suppliers and they want to be able to say: 'If we take 50 people from you this year, what deal can you give us?'

'That will lead to the same restructuring that we had in the software market.'

Comac is paying for CSS with a combination of pounds 14.5m cash or loan notes and 4.47 million ordinary shares, issued at 88.5p, which are not entitled to a dividend of 1.5p the company intends to pay for 1993. Last year there was no dividend.

It is financing the deal by a four-for-one rights issue at 85p designed to raise pounds 20.5m net of expenses. Of that, pounds 14.5m will be used to fund the cash or loan notes, pounds 2.5m to repay external debts of the enlarged group and the balance to fund working capital.

Mr Swinstead's family trust owns 19.5 per cent of Comac and will be taking up more than pounds 750,000 worth of its rights. Samuel Montagu, Comac's merchant bank, holds 10.5 per cent and will take up all its rights.

The shares were suspended at 90p pending shareholders' approval.

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