Compsoft Holdings Plc of Godalming, Surrey announced Friday that it is to acquire accounting and management information software specialists Mega Systems Ltd based in Surbiton, Surrey. Mega was founded in 1983 and supplies systems based on the Data General MV range of hardware at a typical cost price of UKP300,000 to UKP500,000. The move coincided with the release of Compsoft’s mid term results which show a pre-tax profit of UKP161,000 on a turn over of UKP3.5m. Both Compsoft and Wotton Jeffries Plc, planning and transport consultants acquired this April, made substantial losses in 1987 and the figures represent a considerable triumph for the new team installed following the management buy-in by Octagon Industries last September (CI No 772). Geoff Bristow, managing director of Octagon Industries, said at the time that he intended turning the ailing micro database company into the next Logica by acquiring specialist companies and developing software solutions harnessing the companies’ niche market expertise. Since taking over he has either sold off or closed down all of Compsoft’s loss-making European activities and concentrated on expanding the company’s home market.
In the Mega acquisition, initial consideration of UKP4m will be satisfied by the allotment of 9.5m ordinary shares in Compsoft to the shareholders of Mega, of which the vendors have agreed to retain 4.5m. The balance of 5m shares, together with a further 2.8m new ordinary shares are being offered to existing Compsoft shareholders by way of rights raising UKP2m to be paid to the vendors. A maximum of UKP8m deferred consideration – UKP7m payable in Compsoft shares, UKP1m cash – may be payable depending on Mega’s profits over the next two years, which would represent a multiple of twelve times Mega’s profits after tax for the year ending December 31 1989. Mega, which did UKP391,000 pre-tax on UKP2.1m in the year ending December 1987, will remain an autonomous unit within the group. It is in process of converting its applications for other environments. Mega chairman Peter Guymer said that early 1989 had been pencilled in for a stock market flotation but felt a merger with Compsoft provided a better opportunity for acquisitive growth.
