Eircom's plans to take over Horizon for £70m collapse

Eircom's plans to buy the Horizon Computer Group in a deal estimated at £70 million have collapsed. Horizon is now expected to reactivate its plans for a stock market listing in Dublin and London. These plans were suspended when takeover discussions between the two groups got under way last April.

A spokesman for Eircom would only confirm that negotiations with Horizon on an acquisition had ended.

Sources said that finance was not the only sticking-point between Eircom and Horizon and that it had emerged that there was not sufficient synergies between the two groups to warrant a full takeover by Eircom.

It is understood that Eircom and Horizon will look for areas of business where they can co-operate - particularly in knowledge systems and software development.

Industry sources say the failure of the Horizon takeover bid is a blow to Eircom's diversification plans away from its core telecommunications business.

Nobody at Horizon was available for comment, but market sources believe that having flirted with a stock market listing twice in the space of a year, Horizon is now almost certain to reactivate plans for a listing in Dublin and London.

Plans to float were aborted a year ago after stock markets slumped after the economic crisis in the Far East while plans to float earlier this year were put on hold after the takeover approach from Eircom.

Horizon and its advisers have already done much of the donkey work on a flotation and it seems likely that the group could go ahead with a stock market listing within a relatively short period of time - probably in the first quarter of next year after its 1999 financial results are completed.

In 1998, Horizon had pre-tax profits of £2.3 million on sales of £96.8 million, but its corporate finance adviser NCB, in a research document last year, estimated that the group would generate profits of £4.3 million on sales of £115 million in the current year with profits forecast to rise to £6.4 million in 2000.

The largest shareholder in Horizon is Cork-born entrepreneur Mr Samir Naji, with a 67 per cent stake. His shareholding was reduced to that level last year after a private placing of 16.25 per cent of the group's shares with institutional investors last year. That private placing valued Horizon at £45 million at the time, but market sources believe that Horizon will be worth well in excess of £70 million by the time it comes to the market in the first quarter of next year.

Mr Naji's own stake in the company he founded 12 years would be worth around £47 million on the basis of a stock market valuation of around £70 million.

Horizon has a solid record of profits growth and - unlike many high-tech companies - has only moderate debt on its balance sheet.

The group is one of the State's largest independent providers of computer services and information technology products.