Mystery over Psion/Amstrad merger collapse

Mystery was still shrouding the collapse of the Psion/Amstrad acquisition talks this morning as the palmtop maker refused to supply reasons for pulling out of the deal.

The £234 million UK mega-merger was called off Friday about 3pm after a month of discussion when Psion chiefs said they had decided not to go ahead. Both parties said they didn't expect the deal to be resuscitated. Amstrad was surprised by the collapse, saying it hadn't expected any last-minute hitches.

Amstrad's official announcement stated that "it was not possible to reach agreement on the price at which such an offer should be made. The Board of Amstrad is not aware of anything that has come to Psion's attention as a result of Psion's due diligence investigations that should concern Amstrad's shareholders."

Amstrad chief Alan Sugar was reported in The Times on Saturday that Psion had got "cold feet" over the deal. A Psion spokeman denied that was the case, saying: "Psion is not really talking about why or what. Having got all the information, we decided the deal wasn't in the best interests of our shareholders. It wasn't a matter of 'cold feet'; cold feet is the wrong implication to draw."

A spokeswoman at Viglen, the direct sales PC operation, owned by Amstrad, said that it was "business as usual" and claimed there had been no disturbance to sales while sale negotiations were going on.

PCDN COMMENT:

This deal always seemed to have rocky elements. Psion has no history of big-money deal-making and would have been forced to pick up a great deal more than the digital communications know-how that were clearly the chief appeal. Perhaps it was disagreement regarding the value of those other Amstrad operations that were alien to Psion (notably Viglen) that sparked problems. The end result is that Psion will look elsewhere to boost its comms offerings and Amstrad should continue its impressive revival. Certainly it looks better positioned, better balanced, and better funded than at any point in the last few years. With Alan Sugar still at the helm, it would be a brave soul who bet against the Essex stunner reinventing itself in yet another profitable guise.

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