Hong Kong firm to buy Multitone

CHAMPION Technology Holdings, a Hong Kong-listed manufacturer of paging systems, has agreed to buy Multitone Systems, a quoted British counterpart, for more than pounds 21m cash.

The offer follows Multitone's profit warning for the year ending 30 April 1994. The board said on 20 October that it expected a small pre-tax loss in the first half, and a small pre-tax profit for the full year. This was due to the delay of a new product and because a distribution deal was taking longer than expected to come into effect.

The offer is worth 143p a share and investors will be entitled to an interim dividend of 1.5p for the six months ended 31 October 1993.

David Davies, of Champion's adviser, J Henry Schroder Wagg, said the acquisition of Multitone would allow Champion to sell more pagers in China, its main market. In addition, it would give the company access to the European market.

Multitone has factories in Britain, Continental Europe and Malaysia and sells most of its pagers in Europe.

Champion will operate Multitone as an independent British subsidiary and intends to use its spare production facilities to make Champion products. Multitone will keep its management, and all the company's British employees will keep their jobs.

Multitone made a pre-tax profit of pounds 1.6m for the year ended 30 April 1993, on turnover of pounds 24.6m. That compared with a pre-tax profit of pounds 1.9m on turnover of pounds 23.2m in 1991/2.

Earnings per share for 1992/3 were 7.17p, compared with 8.33p.

Champion yesterday revealed pre-tax profits of HKdollars 148.8m ( pounds 13m) on turnover of HKdollars 298.6m for the year to 30 June 1993. Its turnover has grown at a compound annual rate of 122.3 per cent in the past three years on the back of China's speedy economic growth.

Champion's capitalisation on the Hong Kong stock exchange has grown from about pounds 52.5m when it was floated in August 1992 to more than pounds 460m today.

The offer has been accepted by Multitone's directors, who own an aggregate 62.4 per cent of the shares.

Multitone's shares climbed 8p to 139p.