HP set to splash £160m on Brit firm

HP has launched a bid to acquire UK-based managed IT services company Synstar, for £162.9m.

Synstar's board has already recommended that shareholders accept the offer, which was announced on Monday. HP is offering to pay 100p for each Synstar share, which represents a premium of around 28 per cent compared to the 78.25p that Synstar closed at last Friday evening.

Synstar provides infrastructure and hardware support for firms with around 2,000 to 5,000 employees.

The proposed takeover is part of HP's strategy to win a greater share of the IT services market. Announcing the offer on Monday morning, HP said the acquisition will improve its ability to offer end-to-end service capabilities and "further its credibility" with medium and large companies.

A statement from HP said: "HP believes combining the two businesses will result in an organisation better able to increase sales of IT services to its combined customer base and to access a greater share of the European multi-vendor market."

John Leighfield, chairman of Synstar, said HP was stronger at analysing companies and finding specific ways of improving their performance, but that Synstar had a very good track record of keeping its customers' IT systems running. Combining these skills would mean a better service for end users, explained Leighfield, who also described HP and Synstar as "a great fit".

It's possible that HP could face competition for Synstar from a rival bidder. At present, HP has received a guarantee from Synstar's directors that they will sell their stake to HP, representing 0.3 per cent of the overall firm, even if a second bid is received.

HP says it has also received "non-binding letters of support for the offer" from a number of institutional investors who own a further 30.2 percent of Synstar.

Graeme Wearden writes for ZDNet UK