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March 27, 1988

SD-SCICON PLC IS BORN AS UKP252m GROUPMERGER

By CBR Staff Writer

Systems Designers Plc has completed negotiation of terms for the acquisition of British Petroleum Plc’s computer systems and services subsidiary Scicon International Ltd, agreeing to pay UKP82.5m in cash, UKP70m of it on completion and UKP12.5m in two years. A UKP72m rights issue underwitten by Samuel Montagu & Co Ltd with James Capel & Co as brokers is proposed to finance the deal, which is due to be completed on April 19. British Aerospace Plc – which has a 23% stake in Systems Designers – has subscribed for its full rights entitlement. The combined operation, renamed SD Scicon, will rank eighth in the world league of systems integration specialists and will be the second largest European company after Cap Gemini Sogeti SA of France. It will employ over 5,500 staff in operations in the US and UK, France and West Germany. Systems Designers did $7.4m pre-tax on turnover of UKP77.1m in 1987 (see Company Results, below); Scicon lost UKP10.1m at the operating level – almost unchanged from 1986 – on turnover of UKP175m in 1987, so it is two and a half times the size of Systems Designers. Existing shareholders are being offered three new ordinary shares at 50p per share for every four ordinary shares held – against a pre-suspension price of 61 pence – and one new UKP1 6.5% convertible cumulative preference share at par for every four ordinary shares held. Conversion will be exercisable between 1989 and 2000 at a price of about 66.7 pence. In all, 86.4m new ordinary shares and 28.8m new convertible preference shares will be issued. Completion of the acquisition is expected on April 19 and dealing in the shares, ex-rights for existing ordinary shares and nil paid for the new ordinary shares and convertible preference shares, is due to begin on April 20. The new company has to reapply for a listing for its shares because Scicon is so much bigger than Systems that the nature of the company is completely altered. A restructuring of SD-Scicon is already under way with major changes in the company’s US operations which will account for 25% of combined turnover. The UK is expected to contribute 35% and West Germany and France, 19% each. Systems Designers’ acquisition of Scicon will reduce its dependence on financial sector, which accounted for 48% of turnover in 1987 and comes down to 29% after the combination. Manufacturing will contribute 20% – up 5%, and the contribution of the scientific sector falls to 23% from nearly 32%. Scicon’s energy and vehicle inspection interests account for most of the rest.

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