Eircom expected to acquire Horizon

Eircom is expected to agree the purchase of computer company, Horizon, by the end of this month, its first acquisition as a publicly quoted company and its largest buy to date.

It is understood that the telecoms group will pay £70 million (€89 million) for Horizon, which abandoned its own plans for a flotation in favour of the trade sale to Eircom (formerly Telecom Eireann). Some £50 million of the consideration is payable up-front, with the remaining £20 million due over the following two-year period, based on company profitability.

The main beneficiary of the deal will be Horizon's controlling shareholder, Cork-born entrepreneur Mr Samir Naji, whose 67 per cent stake in the company would be worth £46.9 million based on the mooted £70 million sale price.

The rest of the company is owned by institutional and private investors who will make a substantial profit on their investment.

The talks, which have been going on since May, ran into the Eircom flotation process, which saw the company list on the Irish, London and New York stock markets in July.

Finalising the arrangements to be reached with the company's other managers is understood to have been another delaying factor in the talks.

Horizon, which was valued at £45 million at the time of a £7.4 million private share placing last year, is one of the state's largest independent providers of computer services and information technology products, with a strong growth record in recent years.

It has significant business in systems integration, distribution, training and consultancy in the small and medium-sized business sector.

But it also lists Eircom, along with multinationals such as Motorola, among its customers.

The group employs more than 200 people in Ireland, Britain and Europe.

Last year, Horizon generated pre-tax profits of £2.3 million on sales of £96.8 million. The group's financial adviser, NCB, is forecasting pre-tax profits of £4.3 million and sales of £115 million in the current year.

Founded in Cork in 1988, Mr Naji's parents reportedly mortgaged their home to launch the business. Although it is still headquartered in Cork, much of the company's business is now run from Dublin.

The company had intended to float last year but postponed going public after markets weakened in the wake of the crisis in the Far East. The acquisition is in line with Eircom's strategy. Earlier this year, it paid £8.5 million for LAN Communications, an Irish networking company, and also paid £4 million for the Northern Ireland telecoms equipment supplier, Atlas Communications.