Two UK Digital resellers, Keltec and Progress, are to merge to broaden their markets and push forward flotation plans.
The companies are presenting the deal as an equal merger, although Keltec is by far the larger partner, with a turnover last year of #23 million compared to Progress' #11 million.
Reflecting this, it is Keltec's senior executives who retain the top positions in the merged entity, now called Keltec Progress. Its chairman Brian Griffiths and managing director John Fison retain their titles, while Progress' MD and founder Chris Davis takes responsibility for operations and services. Fison will have specific responsibility for sales, marketing and personnel.
The new company will be located in Keltec's offices, with staff at Progress' Chesham, Buckinghamshire headquarters moving to its partner's Bracknell, Berkshire HQ, and personnel at the Progress office in Burton, west Midlands, moving to a new Keltec site in Birmingham. All staff will be retained.
Fison outlined the reasons for the merger, citing complementary markets, a plan to bring the company to the market within five years, and the need to be big in order to remain competitive with larger dealers.
"We wanted to develop our business outside the City. [Progress'] strengths are in process manufacturing, telecomms and education and research," he said.
"Another key reason is to bring forward our flotation plans and get there in three to five years," he added. As part of the same strategy, Keltec Progress will introduce an employee share incentive scheme soon to help retain and attract staff in this competitive area.
Keltec has recently expanded out of its Digital only business and became a directly managed Sun partner on 1 October. Fison admits the takeover of Digital by Compaq has brought new threats, as well as advantages such as greater marketing weight.
"There is the threat of competition from the likes of Computacenter and Morse now," he said. "That's another reason why we needed to grow."
Nick Offin, channel sales director at Compaq, commented that the larger company would have "a bigger opportunity to sell Compaq's high end product range".
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