HP looks to swallow UK IT firm

The proposed takeover of Synstar is an attempt to boost HP's IT services division

HP has launched a bid to acquire Synstar, the British managed IT services company, for £162.9m.

Synstar's board has already recommended that shareholders accept the offer, which was announced on Monday. HP is offering to pay 100p for each Synstar share, which represents a premium of around 28 percent compared to the 78.25p that Synstar closed at last Friday evening.

Synstar provides infrastructure and hardware support for firms with around 2,000 to 5,000 employees.

The proposed takeover is part of HP's strategy to win a greater share of the IT services market. Announcing the offer on Monday morning, HP said that the acquisition would improve its ability to offer end-to-end service capabilities and "further its credibility" with medium and large companies.

"HP believes that combining the two businesses will result in an organisation better able to increase sales of IT services to its combined customer base and to access a greater share of the European multi-vendor market," said HP in a statement.

John Leighfield, chairman of Synstar, told ZDNet UK that HP was stronger at analysing companies and finding specific ways of improving their performance, but that Synstar had a very good track record of keeping its customers' IT systems running. Combining these skills would mean a better service for end users, explained Leighfield, who also described HP and Synstar as "a great fit".

It's possible that HP could face competition for Synstar from a rival bidder. At present, HP has received a guarantee from Synstar's directors that they will sell their stake, representing 0.3 percent of the overall firm, even if a second bid is received.

HP says it has also received "non-binding letters of support for the offer" from a number of institutional investors who own a further 30.2 percent of Synstar.

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