The deal consummates a business relationship that has lasted several years. KIS acquired 20 per cent of Photo-Me in 1990 and 1991. Its chairman and 85 per cent shareholder, Serge Crasnianski, has served as a non-executive director of the UK-based outfit.
Despite claiming intimate knowledge of KIS, Photo-Me has set up a provision of pounds 9.6m against liabilities that may surface. The company said it was confident it would uncover no unpleasant surprises.
Photo-Me operates and makes photo booths. KIS designs and manufactures a range of machines that cut keys, toast waffles, and print stationery and business cards while customers wait.
KIS was also among the first to develop a photo-processing laboratory that produces prints in less than an hour. It is developing equipment that does the same in 15 minutes and is small enough to sit on a desk top.
But Photo-Me's greatest interest is in a new generation of photo booths that KIS has in the later stages of development. Photo-Me plans to replace its current stock of 18,000 kiosks with the new machines. The KIS equipment gives customers greater choice.
Dan David, Photo-Me's chairman, said yesterday: 'It is important for us to acquire the prototype photo booth developed by KIS, together with KIS's research and development expertise, both to protect Photo-Me's existing position as the leading worldwide operator of photo booths and to ensure that the company is in a position to exploit the potential of new technologies in the photographic market.'
Last week Photo-Me said it was in merger talks but firmly denied speculation that it was negotiating to buy part of LIG, the troubled Durex condoms maker and photo processor. David Miller, managing director, confirmed yesterday that the group had no ambitions on LIG.
The pounds 38m is being paid in Photo-Me shares and equates to a 40 per cent premium on KIS assets. The last audited figures for KIS, for the year to 31 December 1992, show that the company had sales of pounds 44m and made pre-tax profits of pounds 600,000.
Photo-Me also published interim results for the half-year to 31 October yesterday. Pre-tax profits were flat at pounds 10.5m, but the company said the underlying trend was firmly up. Photo-Me derived a pounds 1m one-off benefit from the devaluation of sterling. Ignoring currencies, operating profit rose by 9.4 per cent. Shares rose from 305p to 310p yesterday.
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