Proposed Acquisition

RNS Number:8644J
InTechnology PLC
10 April 2003



10 April 2003


                                InTechnology plc

              Proposed acquisition of Allasso from Articon-Integralis AG


InTechnology plc ("InTechnology") (RIC: ITO.L), the UK's leading provider of
data storage solutions, today announces that it has reached agreement with
Articon-Integralis AG ("Articon-Integralis") (quoted on the Prime Standard:
AAGN) to acquire the issued and outstanding share capital of its subsidiaries
making up the specialist network and information security distributor business,
Allasso, for an initial consideration of Euro25.0 million (#17.2m)1, with potential
deferred consideration of up to Euro3.8 million (#2.6m). The consideration for the
acquisition will be paid in cash and will be financed from InTechnology's
internal cash resources and new borrowing facilities.



Allasso is Europe's leading specialist distributor of IT security products, with
over 220 staff and operations in six countries.  In the year ended 31 December
2002 Allasso reported revenues of Euro152.0m (#104.8m)2 and EBITDA of Euro10.5m
(#7.2m).



Highlights of the Acquisition



*               Provides InTechnology with a platform of 7,000 resellers through
                which to sell storage, security and managed services into key
                mainland European markets



*               Allasso has an identical business model to InTechnology,
                offering technical expertise in the European reseller channel, 
                complementing InTechnology's UK expertise



*               Allasso is Europe's leading provider of IT security products
                which is a fast growing market sector



*               Security and networked storage solutions are complementary
                business areas which can be marketed to the same customer base



*               Transaction will create Europe's largest specialist IT
                distributor



*               InTechnology's customers and vendors are wholly supportive of
                the acquisition



*               The acquisition is expected to be earnings enhancing



*               Completion is expected on 31 July 2003, and will be subject to
                Articon-Integralis shareholder approval at a shareholder meeting
                in June 2003



InTechnology today confirms that its profit expectations for the year to 31
March 2003 remain unchanged.  In addition, as at the end of March 2003,
cumulative contract wins within the Managed Data Services Division have
increased to over #40m (#27 million as at 30 September 2002).





1 The exchange rate of #1 to Euro1.45 is assumed throughout this release

2 Includes sales to other Articon-Integralis companies, who will remain a
  significant customer of Allasso post-completion.




Peter Wilkinson, Chairman of InTechnology, commented:



"For some time now I have been searching for a suitable acquisition which would
enable InTechnology to roll out its successful UK strategy across Europe.



It is essential that the target is in multiple European countries, profitable
and in an associated specialist distribution field with potential for further
growth.



Allasso, Europe's pre-eminent network security specialist, fits the bill
perfectly with the additional advantage of a strong and proven European
management team.  With 7,000 resellers throughout Europe, who are all well
versed in networks and security, we have the perfect infrastructure on which to
layer our products and managed services.



I believe the price we have paid represents excellent value to our shareholders
and I look forward with relish to returning to expanding our business."



Mark Silver, CEO of Articon-Integralis, said:



"The proposed transaction will strengthen Articon-Integralis' financial
position, allowing the Group to focus on corporate end users and consolidate its
position as one of the largest Security Systems Integrators in Europe.  We look
forward to continuing our close relationship with Allasso."



The following comment was also made today by a spokesman from HP, one of
InTechnology's largest trading partners.



Olaf Swantee, Vice President, HP Network Storage Systems, EMEA said:



"The European market stands to benefit from the combined expertise that
InTechnology and Allasso bring in the increasingly critical area of security.
InTechnology is a key partner to HP's storage business in EMEA. Their expanded
capabilities will further complement HP's storage leadership by helping us meet
the increasing demand for flexible, adaptive storage solutions."



An analyst and investor conference call will be held today at 9.30 a.m. on 0845
146 2004.  For further details please contact Financial Dynamics.



Enquiries:



Peter Wilkinson, Chairman, InTechnology plc                 01423 877 443
Charles Cameron, CEO, InTechnology plc                      020 7786 3434
Andrew Kaberry, CFO, InTechnology plc                       01423 877 443

James Melville-Ross, Financial Dynamics                     020 7831 3113
Juliet Clarke, Financial Dynamics                           020 7831 3113

Charlie Batten, Dresdner Kleinwort Wasserstein              020 7623 8000
Philip Shapiro, Dresdner Kleinwort Wasserstein              020 7623 8000



                              InTechnology plc

           Proposed acquisition of Allasso from Articon-Integralis AG



Introduction



InTechnology plc ("InTechnology") (RIC: ITO.L), the UK's leading provider of
data storage solutions, today announces that it has reached agreement with
Articon-Integralis AG ("Articon-Integralis") (quoted on the Prime Standard:
AAGN) to acquire the issued and outstanding share capital of its subsidiaries
making up the specialist network and information security distributor business,
Allasso, for an initial consideration of Euro25.0 million (#17.2m), with potential
deferred consideration of up to Euro3.8 million (#2.6m). The consideration for the
acquisition will be paid in cash and will be financed from InTechnology's
internal cash resources and new borrowing facilities.



Allasso is Europe's leading specialist distributor of IT security products, with
over 220 staff and operations in six countries.  In the year ended 31 December
2002 Allasso reported revenues of Euro152.0m (#104.8m) 2 and EBITDA of Euro10.5m
(#7.2m).





Information on Allasso



Allasso is the leading European specialist distributor of network and
information security products such as firewalls, intrusion detection, content
security and other security software. It has one of the most extensive product
ranges available in the market, including Check Point, Nokia, Symantec, and
WebSense and others which are delivered by over 60 qualified IT security
engineers.  It has operations in six countries (UK, France, Germany,
Netherlands, Spain and Italy), and delivers solutions to some 15 countries in
all, employing 220 people.



Allasso is the only specialist network security distributor offering a
centralised European support centre for multi-national customers. Allasso has
long-standing relationships with over 7,000 consultants, systems integrators and
resellers across Europe, including some of the largest system integrators and IT
services organisations. It also has some 6,000 maintenance contracts for vendors
such as Check Point and Nokia that are serviced from its European Support
Centre.



Following its sale by Articon-Integralis, Articon-Integralis will continue to be
a significant customer - it accounted for some 23 per cent. of revenue in 2002.
Other strong relationships exist with significant European systems integrators,
including, inter alia, BT, Dimension Data and Fujitsu. Once separated from
Articon-Integralis, InTechnology believes that Allasso will be able to sell to a
number of previously conflicted customers.





Background to and reasons for the acquisition



InTechnology is the leading provider of specialist IT storage solutions and
equipment to resellers in the UK. It has grown its position successfully for
over a decade and holds the number one position with significant market share.
For some time





2 Includes sales to other Articon-Integralis companies, who will remain a
significant customer of Allasso post-completion.





InTechnology's suppliers and customers have been keen to see InTechnology
introduce its successful business model into other European territories, and for
several years InTechnology has reviewed acquisition opportunities as they have
arisen. The Directors of InTechnology consider Allasso to be an attractive
business and the current environment an ideal time to undertake such an
acquisition. In particular:



*         Allasso provides InTechnology with a strategic and profitable platform
in continental Europe from which it can build on its existing UK storage
products and managed services businesses

*         Allasso operates as a "specialist" security distributor providing
valuable IT security expertise to customers in the same way that InTechnology
does with electronic data storage

*         IT security products and services will continue to be an important
area of IT spend and one where InTechnology can support the growth ambitions of
vendors and resellers alike

*         IT security is highly complementary to storage when sold through the
European reseller channel

*         Allasso has a well established reputation and positions in key
European markets which would take InTechnology a long time to build organically

*         The West European security market is forecast to grow at 17% CAGR
through 2006.  (Source: IDC 2002)





Financial effects of the acquisition



The acquisition of Allasso is expected to be earnings enhancing.  Goodwill on
the acquisition is anticipated to be approximately Euro20.0 million (#13.8m), and
will be capitalised and amortised over its estimated useful life in accordance
with UK GAAP.





Management



Following the completion of the acquisition of Allasso, Philippe Dambrine will
join the Board of InTechnology. Philippe has held the role of President of
Allasso since summer 2001 and brings over 20 years of IT sector experience to
the Group.  He founded Newlink, which was acquired by Articon-Integralis in 2000
and now forms the Southern European operations of Allasso, accounting for a
substantial part of the company operations.  He is currently a member of the
Board of Articon-Integralis.





Terms of the acquisition



The initial consideration for the acquisition is Euro25.0 million (#17.2m) with a
further Euro3.8 million (#2.6m) being payable contingent on the level of sales over
the next 24 months to Articon-Integralis.  The consideration will be paid in
cash and financed from a combination of InTechnology's internal cash resources
and new loan facilities. Completion net assets are expected to be circa Euro9.3
million (#6.4m).



The acquisition of Allasso is conditional on the approval of Articon-Integralis'
shareholders at a shareholder meeting, which will be held in June 2003.




Current trading and prospects



On 12 November 2002, at the time of its announced interim results, InTechnology
made the following statement: "The second half has started in line with
management expectations and the Board is confident that InTechnology has the
appropriate market position, range of services and technical excellence to meet
clients' needs for the management, protection and storage of electronic data,
both on-site and remotely."  Having reached the end of a challenging financial
year, this position remains unchanged and results are likely to be broadly in
line with market expectations.  In addition, at the end of March 2003 cumulative
contract wins within the Managed Services Division have increased to in excess
of #40 million (#27 million at 30 September 2002).







The announcement contains certain 'forward-looking' statements including
statements about the feasibility and benefits of the acquisition of Allasso by
InTechnology. These statements are subject to uncertainty and changes in
circumstances so that actual results may vary materially from the expectations
contained in this announcement. Many of the risks and uncertainties relate to
factors that are beyond InTechnology's ability to control or estimate precisely.
Readers are cautioned not to place undue reliance on these forward-looking
statements to reflect events or circumstances after the date of this
announcement.



Nothing in this press announcement should be construed or be interpreted to mean
that the financial performance of InTechnology for the current or future years
will necessarily match or exceed the historical or published earnings of
InTechnology.



Dresdner Kleinwort Wasserstein Limited (which is authorised and regulated by the
Financial Services Authority Limited) is acting as financial adviser to
InTechnology in relation to the acquisition of Allasso and will not regard any
other person as its customer in relation to this transaction.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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