Chicago-based VideOcart Inc, the company that installs jolly displays on supermarket trolleys, is terminating its strategic alliance with IBM Corp by mutual agreement – it announced the alliance with IBM in July 1991, with IBM agreeing to manufacture the company’s 10-button display unit, but based on in-supermarket experience with this unit and extensive consumer research, it has decided to stop production and go with a redesigned touchscreen unit; it negotiated an end to the IBM manufacturing contract in the autumn with IBM agreeing to provide long-term financing on the $41m owned by the company; it then held discussions with IBM on manufacturing a new unit, but was unable to reach agreement on pricing, and is currently negotiating a manufacturing contract with a third party; under the close-out agreement, VideOcart’s $41m of obligations to IBM will be completely fulfilled via a lump-sum payment of $17m and repricing of IBM’s existing warrant to buy 540,000 VideOcart shares to $4.625 a share from $6 a share – giving the firm a $20m extraordinary gain; VideOcart will retain sole ownership of all 50,000 display units made by IBM as well as the electronic couponing software for IBM point-of-sale systems.
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