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February 24, 1987


By CBR Staff Writer

British Aerospace Plc paid 98 pence each for 11.15m shares in Systems Designers Plc in a dawn raid yesterday which took its total holding in the software and systems house up to 14.9%. The announcement came early in the day with Aerospace stating that the stake represented a strategic holding only, implying that it would not be making any further share purchases. Aerospace paid 21p over the current market price for the shares which ended the day on Monday at 77p following press comment – including ours (CI No 626); the price at lunchtime yesterday was up to 100p. British Aerospace have been an important customer for Systems Designers who are regarded as the most active of the quoted software houses in the defence contract arena and Aerospace said that software systems were an increasingly important aspect of its whole business but insisted that it would prefer Systems Designers to remain independant – a wise decision since a hostile bid would almost certainly see all the key assets walking out. Doubtless the Farnborough, Hampshire software specialist will see more Aerospace sub-contracting come its way though it will be concerned that any increase in Aerospace’s stake may place in jeopardy its relationship with its other major defence customers which include Plessey, GEC and Ferranti. On the London Stock Exchange both CAP and Logica, the other two quoted systems software houses, immediately enjoyed a lift in share price after the Aerospace raid which had the effect of endorsing the value of the companies in the sector. Systems Designers’ share price has floundered around 65p since early December, only recently moving up to the 75p mark, after a low profits warning made by the company in October saw the price drop to 50p. Before that the shares had been traded at around 120p until the middle of July when the comnpany’s brokers issued a downgraded profits forecast and the price tumbled 40 pence.

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