HP digs deep for Synstar

10 Aug 2004

Computer giant Hewlett-Packard (HP) has offered £163m sterling (€243.8m) for the UK-based business continuity provider Synstar in a bid to bolster its IT services capability across Europe.

Synstar is one of the leading names in the expanding business continuity sector. It has operations in eight countries across Europe including Ireland, where it operates a business continuity facility in Swords, Co Dublin.

HP offered £1 sterling in cash for each Synstar Share, valuing the existing issued share capital of Synstar at approximately £162.9m sterling. The offer represented a premium of approximately 28pc to the closing market price of 78.25p sterling last Friday. Synstar’s shares yesterday jumped 27pc on foot of the offer, closing up 21.25p at 99.5p sterling.

Synstar offers disaster recovery and business continuity services to a range of corporate clients, with the promise that it will keep their systems up and running in the case of a major outage caused by fire or some other unforeseen event. It also designs and implements IT risk management strategies. It competes in this market with some of the biggest names in global IT services, including IBM and EDS.

Francesco Serafini, a senior vice-president at HP, said: “The addition of Synstar’s support and business continuity services to HP’s portfolio will enhance our local and regional services capabilities and allow us to provide a greater range of critical service capabilities to our customers.”

The deal is seen as good as cemented, with many of Synstar’s institutional investors having already given it the nod. Marketwatchers believe it highly unlikely that a rival bid for Synstar will materialise at this late stage.

Synstar CEO Steven Vaughan said: “Since 2001, Synstar has delivered a programme of immense change and investment that has developed the company into a highly capable provider of infrastructure managed IT services. The board is pleased to recommend this offer because it recognises a premium to the value in our strategy. In addition, the cash offer gives our shareholders immediate certainty of that value.”

Synstar reported a consolidated profit on ordinary activities before taxation of £8.7m sterling on turnover of £223m sterling for the year ended 30 September 2003, and had net assets of £45.2m sterling.

By Brian Skelly