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Alan Sugar drops merger plan with system builder

Paul Kunert

Negotiations between Sir Alan Sugar's Viglen and system builder Stone Computers have come to an end after neither party could agree on the blueprint for a merger or acquisition.

A deal would have created a more powerful British PC builder, but the combined volumes would have remained relatively small compared to the likes of HP, Dell and Acer.

Discussions between the two organisations began last summer, but a number of hurdles have scuppered the plans.

James Bird, chief executive at Stone Group, said, "I can confirm the deal is off and there is no way forward," but he was unable to comment further.

Bordan Tkachuk, chief executive at Viglen added his confirmation that the deal was off.

Sources familiar with the talks said negotiations reached an advanced stage, but the companies were confronted with financial issues that could not be resolved.

Initially, Stone intended to acquire Viglen but it is believed that Sugar then decided to remain with the combined businesses as chairman.

Viglen is the last bastion of Sugar's IT empire; following the sale of Amstrad to BSkyB in 2007 he stepped down as chairman of Amstrad last year.

In the year to 30 September 2007 - Viglen's latest audited accounts - revenues dropped nearly 11% to £45.6m, and profits dived 97.2% to £117,276. The firm blamed this on the loss of a contract in Northern Ireland and on the management team's focus on the relocation of the business.

In the 12 months to 31 December 2007, Stone revenues grew nearly 43% to £52.8m. These results included an £11m contribution from the acquisition of Compusys.

It is believed that Stone will remain on the acquisition trail.

A version of this story originally appeared on Microsope.


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