Kalamazoo, the Birmingham computer services firm, has confirmed it has received a bid approach from rival conglomerate Lynx Holdings. But both parties say talks are at a very early stage, and that there may be no formal offer.
The biggest hurdle to any transaction is a 40 per cent stake in Kalamazoo which is held by a trust. It is unclear whether Kalamazoo Trust, set up by the company's founders for the benefit of employees and pensioners, is entitled to sell its stake.
Kalamazoo's #25 million market cap is less than a quarter of the size of Lynx Holdings, which was valued at #108.8 million on June 7.
There are a few operational synergies between the two groups. Lynx and Kalamazoo own the UK's two biggest Tetra resellers, both of which specialise in the manufacturing sector. Kalamazoo's computer maintenance business would also fit in snugly with Lynx Technology, the corporate reseller arm of Lynx Holdings.
Kalamazoo's automotive dealer systems business is the jewel in its crown. It has a 22 per cent share in the European car dealer systems market, in second place, behind ADP,a US-owned company, with 23 per cent share.
Last month, Kalamazoo's shares plunged 30 per cent following disclosure that profits within its accountancy software division had been overstated. Two employees were sacked for falsifying sales figures.
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