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October 11, 1998

SHARE PRICE SLUMP THREATENS CHS’S ACQUISITION OF VOBIS

By CBR Staff Writer

Miami, Florida-based distribution firm CHS Electronics Inc is on the verge of backing out of its deal to pay around $320m for one of Europe’s last PC makers, Vobis Microcomputer AG of Germany. The basis for the deal has been undermined by a collapse in Vobis’ share price. It hit a low of $7.90 last week – compared to a high towards the end of last year of $30. When the deal was initially agreed in July, CHS had to beat off a counter-bid from its arch-rival Ingram Micro Inc. Failure of the Vobis acquisition would be a big set-back for CHS. It was due to buys units from Vobis’ parent Metro AG that had net sales equivalent to $2.3bn last year. Vobis alone has 813 stores in 11 European countries and sells 50,000 PCs a month while its build-to-order assembly company produces one million units a year. CHS had expected the Vobis deal to close at the end of September and last week said that its third quarter sales of $2.2bn were in line with expectations. CHS chairman Claudio Osorio said the downward pressure on the share price did not reflect the strength of the company’s business. In my opinion, our current stock price is inexplicable in light of our recent results and balance sheet position, he said.

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