Cray pays pounds 50m for Dowty arm

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The Independent Online
CRAY ELECTRONICS is paying pounds 50m for Dowty's old information technology division and is raising most of the money by a pounds 39m one- for-two rights issue at 61p a share.

TI Group said when it took over Dowty last month that it planned to sell the division. It has kept a property worth pounds 13m and some cash.

Cray made the announcement as it revealed pre-tax profits of pounds 4.8m for the year to 30 April, up from pounds 3.5m. Turnover fell to pounds 84.8m from pounds 107.3m as some businesses were sold.

Earnings per share rose to 3.2p from 2.5p and the company is paying a dividend of 0.5p, the first since new management under Sir Peter Michael, the chairman, took over in 1989.

The Dowty arm made operating profits of pounds 1.5m in the year to 31 March, compared with pounds 11.9m in 1991 and pounds 22.4m in 1990. Cray hopes to get profits of more than pounds 5m from it by next April to maintain its own earnings per share.

Sir Peter said he had identified Dowty's information technology arm as a perfect acquisition to expand Cray's datacommunications business 18 months ago. He plans to cut costs and accelerate the existing product development programme.

Roger Holland, deputy chairman, said that the European data communications market, in particular, was poised to grow quickly as it was deregulated.

The old Dowty management has already reduced the workforce by 2,000 in 1992 and the cost base by pounds 7m.

Cray shares were suspended at 75p on Thursday morning as rumours of a deal seeped out. They will be relisted on Monday morning.

TI also revealed yesterday that it is closing Cognito, Dowty's paging business. It was carried in Dowty's books at pounds 21m and was losing pounds 1m a month.

TI shares fell 6p to 317p.

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