Hewlett-Packard, the US computer giant, yesterday paid £163m for Synstar, the British technology services company, raising hopes of further consolidation in the sector still struggling with the post-boom fall out.
Steve Vaughan, the chief executive of Synstar, said: "It's tomorrow's price today and it's in cash." The company's shares surged 27 per cent on news of the deal, which confirms HP's determination to build its presence in the European IT services sector, having completed a similar deal recently in Germany.
HP is offering 100p a share cash. Synstar shares closed up 21.25p at 99.5p.
HP is trying to match the likes of IBM, which began building its presence in the market several years ago. Globally, HP lies fifth in the market for IT services behind IBM, EDS, Fujitsu and Computer Services Corporation.
Synstar provides support services to companies, keeping computer systems running as well as offering disaster recovery expertise in the event of major failures. Mr Vaughan has options in more than 1.4 million shares in the company with a strike price of 48.5p, valuing his holding at £720,000. "It keeps the wolf from the door," Mr Vaughan said.
Francesco Serafini, a senior vice-president at HP, said: "The addition of Synstar's support and business continuity services to HP's portfolio will enhance our local and regional services capabilities and allow us to provide a greater range of critical service capabilities to our customers."
Synstar has received support for the recommended deal from 30 per cent of its institutional shareholders already, with analysts believing it unlikely that a rival bid will materialise given the financial firepower of HP.
Mr Vaughan said: "Since 2001, Synstar has delivered a programme of immense change and investment that has developed the company into a highly capable provider of infrastructure managed IT services.
"The board is pleased to recommend this offer because it recognises a premium to the value in our strategy. In addition, the cash offer gives our shareholders immediate certainty of that value."