Telecommunications and computer group, ITG, has agreed to acquire Computers In Ireland - trading as Computerland & Workstations - for up to £8.75 million (€11.1 million). The main beneficiaries will be Mr Ed Horgan and Mr Pat Conlan, the majority shareholders in Computers In Ireland. But Mr Paschal Taggart, non-executive chairman of ITG, and Mr Terry Cooney, both partners in Cooney Taggart, who each hold a 3 per cent stake in Computers In Ireland, will each receive up to £262,500. Mr Taggart is also chairman of Computers In Ireland and was pivotal to the deal.
The initial consideration consists of cash amounting to £3.94 million and £2.56 million in new ITG shares. A further consideration of up to £1.56 million in cash and £690,000 in new ITG shares will be paid if pre-tax profit reaches £1.1 million in the year to April 30th, 1999. The shares will be issued at the average of the closing price for the five days preceding the two business days before the payment date. The new shares cannot be sold for 6 to 12 months, subject to "some initial release", said ITG's finance director, Mr John Williamson. Mr Ed Horgan will head ITG's expanded computer division, and join the ITG board. Computers In Ireland, set up 10 years ago, generates annual sales of £15 million and has net assets of £1.4 million. The purchase will lead to a substantial goodwill which is likely to be written off over 20 year. This, Mr Williamson said, will cause a dilution in earnings.
ITG has four divisions; Telecoms, computer, payphone and credit card services. It has been expanding in three of the divisions, and the acquisition represents an expansion of the computer division, said Mr Williamson. He noted that the businesses will fuse well because Computers In Ireland is "high on hardware and we are high on maintenance".
Mr John Nagle, ITG's chief executive, said "this acquisition takes us a stage closer to being market leaders in all our four core areas of activity and, once again, enables us to expand the range of services to our clients. Additionally, our customer base will also expand and we will strengthen our relationship with computer manufacturers Compaq and Toshiba".
Computers In Ireland employs 100 people at two locations; Dublin and Cork. Apart from being a major seller of computer hardware, it also owns Workstations Training, a company that offers information technology courses. ITG's most recent results showed a rise in pre-tax profit from £127,000 (€161,000) to £745,231 (€946,000) in the six months to October 31st 1998, reflecting a major contribution from acquisitions together with core growth.
