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Non-Tech : CompUSA (CPU) -- Ignore unavailable to you. Want to Upgrade?

To: Xpiderman who wrote (567)	6/22/1998 1:46:00 PM
From: Xpiderman	Read Replies (1) \| Respond to of 3187

CompUSA seen paying cheap price for rival By Jeff Mamera biz.yahoo.com NEW YORK, June 22 (Reuters) - Computer retailer CompUSA Inc.'s $275 million acquisition on Monday of Tandy Corp.'s (TAN - news) Computer City eliminates a key rival in the competitive retailing segment at an attractive price, analysts said. The $275 million in cash and debt CompUSA agreed to pay in the deal with Tandy amounts to just 15 percent of Computer City's annual sales of about $1.8 billion, according to Mitchell Bartlett, an analyst at Dain Rauscher Wessells. Shares of CompUSA, whose 160 stores already make it the nation's largest computer retailer even before the deal for Computer City, gained 15/16 to 17-3/16, in late morning trading. Computer City operates about 100 stores, and is CompUSA's largest competitor, analysts said. ''They gain a lot of synergy and eliminate their largest competitor,'' Bartlett told Reuters in an interview. ''I think with a $275 million price tag and even some store-closing costs you can get still get a pretty good payback.'' Bartlett and other analysts said the deal, expected to close in three months, would allow CompUSA to cut advertising and overhead costs. They declined, however, to speculate on a dollar amount for the savings. In a press statement early Monday, CompUSA said it expects to gain ''synergies and efficiencies'' from the acquisition. ''We believe this will allow us to provide our customers with additional products, superior service and added convenience,'' CompUSA president and chief executive James Halpin said in the statement. ''We anticipate that the purchasebut, in a conference call after announcing the deal, CompUSA said the acquisition would be dilutive in the first six months after closing, but become accretive within 12 months. Some analysts said it was hard to say whether this projection would prove true. ''Further out you are cautiously optimistic,'' said Tom Cal, an analyst at SoundView Financial. ''But as with all acquisitions, getting from here to there is the issue.'' ''There is risk in the integration of management and operations,'' Cal added. ''And the general retail environment hasn't been that great.'' CompUSA, in the statement, said it plans to keep the Computer City name in Canada after the deal, although has not finalized its plans for other Computer City stores. ''Given the competitive landscape I think these two stores would compete far more effectively joined than separate,'' said Lewis Alton, an analyst at L.H. Alton & Co. Tandy, for its part, said it was selling Computer City in order to better focus on its RadioShack unit. The company said it would take an after-tax charge of between $38 and $43 million for the Computer City sale. Tandy shares stood up 2-1/2, at 44-15/16.