Psion ditches Amstrad bid and blames price

The proposed pounds 230m takeover of Amstrad was dramatically called off yesterday when Psion said it was not possible to reach an agreement on the price.

No reason were given for the decision with Amstrad's chairman, Alan Sugar, saying: "I'm as much in the dark as you are." He added that he was not aware of any details coming to light during Psion's due diligence process that could have provoked the move.

Psion took the decision after a board meeting yesterday which was the first time the group had officially met to review the offer since news first leaked a month ago. Following a presentation from its two merchant bankers, BZW and Charterhouse, the hand held computer maker contacted Amstrad saying that they would want to make a substantially lower offer. Amstrad declined and the deal was then called off.

The previous offer would have valued Amstrad shares at no less than 200p per share. This would have valued the company at at least pounds 234m and Mr Sugar's 34 per cent stake at pounds 80m.

Though Psion declined to give specific details for its decision it is understood that a collection of factors rather than one specific issue caused them to feel that the previous offer of not less than 200p was no longer feasible.

Amstrad's shares plunged almost 30 per cent to 160p while Psion shares edged 3p higher to 423p.

Mr Sugar said Amstrad was still a strong, clean company after splitting off its loss making consumer electronics business to, in which it has a 66 per cent stake.

Mr Sugar said that without the consumer business Amstrad's remaining businesses such as Viglen and Dancall would continue to shine. The - restructuring would be un-affected by Psion's decision. The new company, Digital Technology which will include the cable and satellite receiving equipment would start trading on 1 August.

Asked whether Amstrad was still for sale Mr Sugar said: "One has to look at any offer that might come along that is in the best interest of shareholders."

He denied that he was keen to sell his Amstrad stake in order to concentrate on other activities such as Tottenham Hotspur Football club of which he is chairman.

Mr Potter who founded Psion, has turned it into a worldwide leader in hand held computers and personal organisers. These pocket sized machines provide a wide range of voice and data functions.

When news of Psion's interest in Amstrad emerged a month ago, the attraction was Dancall, Amstrad's digital cellular phone business which has been growing rapidly.