Computer component and retail lighting distributor Electrocomponents Plc is expanding into the computer supplies business with the acquisition of the Misco Organisation for UKP11m. The news accompanied first half results which showed Electrocomponents well on course to attain City forecasts of UKP45m pre-tax for the year even though Misco is unlikely to contribute positively to the current year. The interim 13.2% increase in Electrocomponents’s profits to UKP20.5m was down to improved demand in the UK and US across all product ranges. The one black spot was a weak market in West Germany for franchised components. Misco is currently losing money. In the nine months to September, Misco Inc made an operating profit of $600,000 on sales of $16m but the European operations lost UKP1.4m on sales of UKP10.4m. The UK and West German subsidiaries set up in October 1985 are approaching break-even and the year-old Italian operation should reach this position in the second half of 1988. Electrocomponents’ board says it has been looking to move into computer supplies for some time and Misco represents a cheaper way of entering the market than setting up several greenfield operations. The price being paid to Misco’s current owners, The Gillette Company, is UKP2.7m plus the asset value as at October 31 – some UKP11.1m. As one might expect after the share crash, the deal is for cash.
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