Shares in McDonnell Information Systems, the computer systems group, rose yesterday by 9p to 59p on news that GEAC Computer Corporation, a Canadian computer services group, had acquired a 3.7% shareholding the company.
GEAC several years ago acquired the Canadian business of McDonnell Douglas, MDIS's former owners. MDIS was bought from McDonnell Douglas by a management team.
GEAC's decision to make a significant investment is the best bit of stock market news to happen to the beleaguered MDIS for some time.
Last month the group announced that it would not be paying a final dividend for the year. MDIS also said its year-end figures would include exceptional provisions of around pounds 20m as a result of the closure of some non-core operations, the cost of about 170 redundancies and other write- offs.
The board, with Ian Hay Davison as chairman, said it was confident that revenues in the core UK and US operations will continue to grow and that the refocusing strategy would lead to reduced costs. GEAC's share purchase is the first external endorsement of that confidence.
MDIS finance director, Richard Barfield, said yesterday that GEAC had recently been involved in an unsuccessful attempt to buy MDIS's loss-making library division. He said that there had no subsequent discussions with GEAC since then.
Shares in MDIS fell from their flotation price less than two years ago of 260p to their current levels (and reached a low point of 29p) after a series of profit warnings.Reuse content