The news that ICL Plc is to acquire Warrington, Cheshire-based Technology Holdings Plc for a maximum of UKP40m seems to set the seal on the success of the management buyout team at what used to be the distribution arm of MBS Plc – a business that MBS top management felt was such a drain on its corporate resources that it couldn’t wait to let the company go – despite the fact that it represented most of its volume. At the beginning of this year, the company reported that for the year to June 30 1991, it achieved net profits up 103.3% at UKP7.1m on turnover up 2.3% at UKP130.2m (CI No 1,845), with chairman and managing director Derek Lewis saying that the figures concealed myriad ways in which the business had been redefined towards higher margin business. He saw the future lying in the medium to large corporate sector, financial services and public utilities, and a small group of resellers servicing those sectors, who need the support of a broad range of value added services. Technology Holdings currently comprises four divisions, Open Systems, Personal Systems, and Technology Distribution and the Technology Services division.

General Election

The Open Systems division is a reseller for Digital Equipment Corp, Sun Microsystems Inc and latterly IBM Corp, and added its new parent, ICL, in January, and also has an arrangement with Hewlett-Packard UK Ltd. High-end personal computers are handled by the Personal Systems division, which offers IBM, Compaq Computer Corp and Toshiba Corp machines. The Technology Distribution division holds stock for dealers and provides equipment and financing. The Consumables area holds computer supplies and an Alternatives section specialises in personal computer clones. And the Technology division offers consultantancy, training, systems engineering and maintenance, and document image processing services. At the turn of the year, chairman and chief executive was saying that he didn’t see the need to take the company back to the market in the immediate future since the company had unused bank credit lines of UKP20m with no demands for cash resources. He said he would be reviewing the situation after the General Election, and the result of that review was the deal with ICL. Under the agreement, ICL is paying UKP30m upfront for the company, just ahead of the UKP29m buyout price in the deal that was funded by Schroder Ventures and North of England Ventures. ICL is keen to get the Personal Systems division behind its new personal computers as part of its campaign to grow that part of its business to UKP500m a year within five years, compared with UKP100m a year now. It is not clear how the other companies whose machines are distributed by Technology will react to the company being owned by a competitor, but the development seems likely to be the shape of things to come as the ravaged and fragmented distributor, dealer and value-added reseller sectors become recognised as a major candidate for rationalisation and the emergence of a handful of large companies that can stand up to the manufacturers. ICL will hand its own third party distribution operations over to Technology, which will continue to be run by Derek Lewis and his team. Adding ICL’s business immediately swells annual turnover to somewhere around UKP250m, putting the company into the number one spot in the UK, ahead of P&P Plc.