For the eminently reasonable sum of UKP55,000, self-proclaimed Pick Specialist Sanderson Electronics Plc has taken a controlling stake in UCL Computer Factors, a Pick system supplier that looks set to do a profitable UKP8m worth of business this year in areas that complement and add to Sanderson’s own vertical markets in the Pick field (CI No 1,481). The deal stems from Sanderson being the right company at the right time: too small to survive on its own, UCL Computer Factors was not much use to anyone else – least of all to its owner, Ferrari Group Plc, which admits as much – all Ferrari wanted from the acquisition of the UCL Group Plc in August (CI No 1,266) was its maintenance operations, which it retains. Accordingly, Sanderson marketing director Neil Radcliffe argues that the deal is attractive to Ferrari too – not for what it’s got for UCL, but for what it no longer has to spend. Sanderson will be taking over UCL’s Bull and NCR ADDS hardware-based systems for mail order, wholesale distribution, debt recovery and ambulance scheduling: Radcliffe believes that the Sheffield-based group will give Computer Factors the direction and focus that it needs and that Ferrari, which doesn’t understand the solutions business, couldn’t offer. With UCL incurring pre-tax losses of UKP520,000 last year, Ferrari saw the business as a burdensome loss-maker but if the UKP540,000 group charges that UCL paid to Ferrari are excluded from the balance sheet, UCL is in fact already profitable. What’s more, while Radcliffe admits that he hasn’t had a detailed look at the accounts of separate businesses within UCL, he claims that there is not one loss-maker among them. UCL is staffed at 120, with the majority in Coventry; 26 are employed at the Belfast office, which has secured some good government contracts offering UCL products and bespoke software, while a dozen or so work in the South-west on UCL’s Minder debt collection system. Of the four vertical markets in which UCL trades, mail order systems is the largest, debt collection comes second, then wholesale distribution, with ambulance scheduling the smallest. There will be no radical changes within these businesses – no job losses, and their autonomy will be unaffected – but Sanderson has already got plans to add Stratus Computer fault-tolerant Pick versions to the existing mail order and wholesale distribution systems now running on Bull and NCR machines. UCL also has a great name user-base – customers include British Gas, Citibank and British Telecom – and Radcliffe sees the acquisition as a way of introducing home-grown Sanderson products to those sort of organisations. On the service side, Sanderson will take over the maintenance of all software on UCL sites, and has a deal to refer all hardware maintenance to Ferrari – that way, it doesn’t have the aggravation of re-training its staff for Bull and NCR equipment. All round, it looks as if Sanderson has got a bargain, and Radcliffe will be spending the next few weeks getting to know the UCL businesses and finding out what direction and focus they need – the clear aim being to shape a business worth taking up the option on the other 45% of its shares for UKP500,000 plus attributable net assets. This, for Sanderson and UCL, would obviously be the most successful outcome. If, on the other hand, UCL fizzles out, it can be closed or sold off and Sanderson will have lost very little indeed – and that is the added beauty of last Tuesday’s deal.
