The long-awaited bid from Birmingham-based ACT Group Plc for NMW Computers Plc finally arrived yesterday – but at a shock price of just 18 pence per share against the 41 pence at which NMW shares closed on Wednesday night. Worse, from outside shareholders’ point of view, the bid is being recommended and ACT has irrevocable acceptances for 22.2m shares, which with its existing 25.4% stake gives it 35.9%. Reason for the desperately low valuation is that far from getting the NMW Charterhouse subsidiary right, as NMW said it had in April, the business has been bleeding heavily, to the point where NMW was unsure of continued support from its bankers. The 18 pence bid values the whole of the Nantwich, Cheshire company at just UKP3.8m, and followed advice from independant assessors and brokers at Barclays de Zoedd Wedd. NMW made pre-tax losses of UKP1.2m for the six months ended June 30 against profits of UKP278,000 last time, mostly due to the poor performance of NMW Charterhouse. Charterhouse has suffered from poor sales of its legal and debt software products and higher than anticipated costs in developing the Broder 400 insurance product. Since both the trading and financial position of NMW has deteriorated so much since ACT bought of 25.4% of its shares in June, ACT approached the Panel on Takeovers and Mergers to obtain special dispensation to buy further shares at a lower price than the 40 pence it paid Specialist Computer Holdings Ltd. Shareholders have the option of either taking cash or one new ACT share, trading at 144 pence yesterday, for every eight NMW shares. A spokesman at ACT said that a full takeover will result in rationalisation at NMW with the main focus on Charterhouse. If the outside shareholders, who look to have little option but to accept the bid, do indeed bow to the inevitable, ACT, with Quotient already under its belt, will be the overwhelmingly dominant software and computer services player in the City of London, with a strong position on overseas bourses.
