Silvermines bids for hi-tech firm

Silvermines, the engineering and technology company, has made a recommended £4.5 million sterling bid for Active Imaging, a publicly quoted British manufacturer of products for digital imaging. Active Imaging was valued at more than £40 million 20 months ago, shortly after its shares got a share quotation on London's AIM. It has been incurring losses, and two months ago had to raise £2 million in a rights issue to keep going. TVX, a US technology company, withdrew an £18 million a bid last March blaming the adverse US stock market at the time. Silvermines, which has a history of turning around loss-making acquisitions, is offering 17 new Silvermines ordinary shares for every 92 Active Imaging ordinary shares, valuing each Active Imaging share at 9.33p, representing a 16.6 per cent premium on the pre-bid price. This compares with the flotation price of 112p. Silvermines has received irrevocable undertakings from shareholders and directors representing 26.01 per cent. In addition, 3i Group has said it intends to accept in respect of its holdings representing 24.3 per cent. With these commitments, and Active Imaging's weak financial position, Silvermines appears well on the way to successfully completing the deal, unless there is a counter bid. Active Imaging, formed in February 1996, incurred losses of £2.89 million in the six months ended June 30th, 1996, and had net assets of £3.3 million in December 1996.

Losses are continuing and Mr Clem Jansen, group managing director, said the net assets will, in effect, be wiped out by the end of this year. The purchase price of £4.5 million will be represented by goodwill. Mr Jansen expects a rapid improvement from Active Imaging which recently secured a £1 million order from Trafficmaster plc. A shutdown of the US operations and the integration of its core business with Silvermines' CCTV business should lead to a breakeven position in 1998. The benefits should flow through in 1999, said Mr Jansen. He noted that digital broadcasting will "take off next year" in Britain. "We needed to get on the bandwagon". The acquisition should provide Silvermines with the necessary capabilities to compete in the CCTV market as it moves from analogue to digital technology. Silvermines said Active Imaging will give it "the necessary technology for communications protocols and networking competence, digital image processing, digital storage and recording, and digital switching technology".