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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 9, 1999
Insight Enterprises, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25092 86-0766246
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
6820 South Harl Avenue, Tempe, Arizona 85283
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 902-1001
Not Applicable
(Former name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On May 10, 1999, Insight Enterprises, Inc., a Delaware corporation
("Insight"), and Action Computer Supplies Holdings PLC, a company registered in
England ("Action"), agreed to the terms of the proposed acquisition of all the
issued share capital of Action by Insight (the "Merger") by means of a scheme of
arrangement under Section 425 of the Companies Act of 1985, a United Kingdom
statutory procedure. Pursuant to the terms of the Merger Agreement, dated May
10, 1999, by and between Insight and Action (the "Merger Agreement"), holders of
Action common stock will receive 0.16 shares of Insight common stock for each
share of Action common stock.
The Merger is expected to close before the end of September 1999
contingent upon the fulfilment of certain conditions regarding the Merger
including, but not limited to, approval of the Merger by both the shareholders
of Action and the High Court of Justice in England and Wales and approval of the
issuance of common stock pursuant to the Merger Agreement by the stockholders of
Insight. The Merger will be accounted for as a pooling of interests.
Item 7. Financial Statements and Exhibits.
Exhibit Number
2.1 Merger Agreement, dated May 10, 1999, by and between Insight
Enterprises, Inc. and Action Computer Supplies Holdings PLC
2.2 Conditions to the implementation of the Scheme of Arrangement
and the Merger
99.1 May 9, 1999 United States press release
99.2 Presentation to U.S. Investors
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INSIGHT ENTERPRISES, INC.
(Registrant)
Date: May 12, 1999 By: /s/ Eric J. Crown
------------------------------------
Eric J. Crown
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Merger Agreement, dated May 10, 1999, by and between Insight Enterprises, Inc.
and Action Computer Supplies Holdings PLC
2.2 Conditions to the implementation of the Scheme of Arrangement and the Merger
99.1 May 9, 1999 United States press release
99.2 Presentation to U.S. Investors
</TABLE>
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EXHIBIT 2.1
Dated 10 May 1999
INSIGHT ENTERPRISES, INC.
and
ACTION COMPUTER SUPPLIES HOLDINGS PLC
-----------------------
MERGER AGREEMENT
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MERGER AGREEMENT
THIS AGREEMENT is made on 10 May 1999.
BETWEEN:
(1) INSIGHT ENTERPRISES, INC., a US corporation organised under the
laws of Delaware, having its registered office at 6820 South Harl Avenue, Tempe,
Arizona 85283, USA (Offeror);
(2) ACTION COMPUTER SUPPLIES HOLDINGS PLC, a company registered in
England with number 02479302 and whose registered office is at Alperton House,
Bridgewater Road, Wembley, Middlesex HA0 1 EH (Offeree).
WHEREAS:
(i) The parties desire the merger of Offeror and Offeree.
(ii) The parties intend to effect the Merger by means of a scheme
of arrangement under Section 425 of the Act to be proposed by
Offeree to its shareholders under which the whole of the
Offeree Scheme Shares will be cancelled and reissued to
Offeror or a wholly owned subsidiary designated by Offeror and
Offeror will issue Consideration Stock to the former
shareholders of Offeree.
(iii) The Merger is subject to the Conditions.
IT IS AGREED AS FOLLOWS:
1 Interpretation
1.1 Definitions
In this Agreement, including the Appendices, the headings shall not
affect its interpretation and, unless the context otherwise requires, the
provisions in this Clause I apply;
Acquisition means the acquisition of Offeree by Offeror Group pursuant
to the Scheme;
Advisers in relation to Offeror means Morgan Stanley, Skadden Arps
Slate Meagher & Flom LLP and KPMG LLP and in relation to Offeree means Warburg
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Dillon Read, a division of UBS AG, Linklaters & Paines and Deloitte & Touche,
including (unless the context requires otherwise) partners in and directors and
employees of such advisers;
Affiliate means, in relation to a party, any person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the party or who otherwise falls within the
definition of affiliate for purposes of Rule 145 of the United States Securities
Act of 1933 or SEC Accounting Series Release 135. A party shall be deemed to
control a person if such party owns directly or indirectly, 50% or more of the
voting rights of such person;
Act means the Companies Act 1985, as amended;
Agreed Form means, in relation to the documents listed in Appendix I
hereto, such documents in the terms agreed between the parties, whether before
or after the date hereof, and signed by them or on their behalf for the purposes
of identification, such agreement not to be unreasonably withheld or delayed;
Agreed Terms means, the terms set out in Appendix II hereto;
Announcement means the joint press announcement in the Agreed Form;
Announcement Date means 10 May 1999;
Associate, in relation to Offeree, means: (i) any member of the Offeree
Group: or (ii) any director, officer or employee of any member of the Offeree
Group;
Board means the board of directors of any relevant person;
Business Day means a day (other than a Saturday, Sunday or public
holiday in London or New York) on which banks are generally open for business in
London and New York;
Circular means the circular in the Agreed Form to be issued by Offeree
to Offeree Shareholders containing an explanatory statement and the Scheme
regarding, inter alia, the cancellation of the Offeree Scheme Shares, the
allotment of New Offeree Shares to Offeror (or as it may direct) pursuant to the
Scheme and the allotment of Consideration Stock to Offeree Scheme Shareholders;
City Code means the City Code on Takeovers and Mergers;
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Conditions means the conditions to the Merger set out in Appendix 1 to
the Announcement;
Consideration Stock means the fully paid and non-assessable Offeror
Stock to be issued to Offeree Scheme Shareholders as consideration under the
Scheme on the terms referred to in the Announcement;
Court means the High Court of Justice in England and Wales;
Court Meeting means the meeting of Offeree Shareholders convened by the
Court, notice of which will be contained in the Circular (or any adjournment
thereof);
Court Order means the order of the Court sanctioning the Scheme under
Section 425 of the Act and confirming the cancellation of the share capital in
connection therewith under Section 137 of the Act;
Effective Date means the date on which the Scheme becomes effective;
Employee Share Option Schemes means, together, the 1990 Executive
(Performance Related) Share Option Scheme, the 1994 Executive Share Option
Scheme, the 1996 Replacement Share Option Scheme, the Sharesave Option Scheme
1997 and the Senior Executive Share Option Scheme 1997;
Encumbrance means any charge, mortgage, lien, hypothecation, judgement,
encumbrance, easement, security, title retention, preferential right, trust
arrangement, or any other security interest or any other agreement or
arrangement having a commercial effect analogous to the conferring of security
or similar right in favour of any person;
Exchange Act means the United States Securities Exchange Act of 1934,
as amended;
Exclusivity Period means the period between the date hereof and the
earliest of the Effective Date, 5.00 p.m. (London time) on 31 December 1999, the
date of termination of this Agreement pursuant to Clause 14 and payment of the
amount under Clause 8.3.2 or 8.3.4;
Extraordinary General Meeting means the extraordinary general meeting
of Offeree Shareholders, notice of which will be contained in the Circular or
any adjournment thereof;
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Exchange Proportion means the amount of Offeror Stock to be issued in
exchange for each Offeree Scheme Share determined as provided in Clause 4;
Meetings means the Court Meeting and the Extraordinary General Meeting;
NASDAQ means the NASDAQ National Market System operated by
NASDAQ, Inc.;
New Offeree Shares means the ordinary shares of 10 p each in the
capital of Offeree to be issued fully paid to Offeror (or as it may direct)
pursuant to the Scheme;
Offeree Group means Offeree and its subsidiary undertakings;
Offeree Scheme Shareholders means holders of Offeree Scheme Shares;
Offeree Scheme Shares means the Offeree Shares in issue on the date of
the Scheme together with any further Offeree Shares;
(a) in issue up to 48 hours prior to the time of the Court
Meeting; and
(b) issued thereafter and prior to the close of business on
the Business Day before the date of the Court Order either on
terms that the original or any subsequent holders thereof
shall be bound by the Scheme or in respect of which the
holders thereof shall have agreed to be bound by the Scheme;
other than any such Offeree Shares held or to be held by any member of the
Offeror Group;
Offeree Shareholders means the holders of Offeree Shares;
Offeree Shares means ordinary shares of 10 p each in the capital of
Offeree;
Offeror Group means Offeror and its subsidiary undertakings;
Offeror Stock means shares of common stock of US$0.01 par value each in
the capital of Offeror;
Offeror Stockholder Approval means the affirmative vote of the holders
of a majority of the outstanding Offeror Stock as of the record date for the
Special
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Meeting for the purpose of approving the issuance of the Consideration Stock by
Offeror pursuant to the Scheme;
Offeror Takeover Proposal means any publicly announced intention to
make any bona fide proposal or offer by any third party or any proposal or offer
so made for a merger, exchange offer, consolidation, partnership, joint venture
or other business combination involving, or any purchase of, all or
substantially all of the assets of Offeror Group or more than 50% of the voting
share capital of Offeror which is any such case is conditioned on the Merger not
being completed;
Proxy Statement means the letter to stockholders, notice of meeting,
proxy statement and the form of proxy to be distributed to the holders of
Offeror Stock in connection with the issuance of the Consideration Stock by
Offeror pursuant to the Scheme and any schedules or other documents required to
be filed with the SEC in connection therewith or any revisions or supplements
thereto in the Agreed Form;
Record Date means close of business on the Business Day immediately
preceding the Effective Date;
Representatives means in relation to each party, the directors,
employees, consultants of, and any individuals seconded to work for, such party
(including persons who, at the relevant time, occupied such position);
Resolutions means the resolution to be proposed at the Court Meeting
and the resolutions to be proposed at the Extraordinary General Meeting;
Scheme means the scheme of arrangement under Section 425 of the Act to
be contained in the Circular;
SEC means the United States Securities and Exchange Commission;
Special Meeting means the meeting of Offeror's stockholders being held
in connection with the approval of the issuance of the Consideration Stock;
Takeover Proposal means any publicly announced intention to make any
bona fide proposal or offer by any third party (other than a proposal or offer
by any member of the Offeror Group) or any proposal or offer so made for a
merger, scheme of arrangement, exchange offer, consolidation, partnership, joint
venture or other business combination involving, or any purchase of, all or
substantially all of the assets of Offeree Group or more than 50% of the voting
share capital of Offeree or other similar transaction that is inconsistent with
the implementation of the Merger; and
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Timetable means the timetable for the Merger substantially in the
Agreed Form.
1.2 Subordinate Legislation
Any reference to a statutory provision shall include any subordinate
legislation made from time to time under that provision which is in force at the
date of this Agreement;
1.3 Modification etc. of Statutes
Any reference to a statutory provision shall include such provision as
from time to time modified or re-enacted or consolidated whether before or after
the date of this Agreement so far as such modification, re-enactment or
consolidation applies or is capable of applying to any transactions entered into
under this Agreement prior to the Effective Date and (so far as liability
thereunder may exist or can arise) shall include also any past statutory
provision (as from time to time modified, re-enacted or consolidated) which such
provision has directly or indirectly replaced except to the extent that any
statutory provision made or enacted after the date of this Agreement would
create or increase a liability of any party under this Agreement.
1.4 Companies Act 1985
The words holding company, subsidiary and subsidiary undertaking shall
have the same meanings in this Agreement as their respective definitions in the
Act.
1.5 Interpretation Act 1978
The Interpretation Act 1978 shall apply to this Agreement in the same
way as it applies to an enactment.
1.6 Appendices etc.
References to this Agreement shall include the Appendix to it and
references to Clauses are to clauses of this Agreement.
1.7 Currency
References in this Agreement to [L], p or pound sterling
shall be deemed to be references to the lawful currency of the UK. References in
this Agreement to $, cents or US dollars shall be deemed to be references to the
lawful currency of the US.
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2 The Merger
2.1 The Merger shall be effected by way of the Scheme. The parties
shall use all reasonable endeavours to comply with the Timetable and (so far as
they each may be able) to achieve satisfaction of the Conditions provided that
this Clause 2.1 shall not oblige Offeree to take any action if, at the time when
such action would otherwise have been required pursuant to this Clause 2.1, the
Board of Offeree shall have withdrawn (or modified in a manner adverse to
Offeror) its approval or recommendation of the transactions contemplated by this
Agreement (whether before or after the Court Meeting or the Extraordinary
General Meeting) and Offeree shall, at such time, have paid any amounts which
are due to be paid at that time under Clauses 8.3 or 14.2.
2.2 The parties shall cooperate in the development of a structure for
the Merger with the objective of achieving optimum taxation consequences for the
enlarged Offeror Group consistent with satisfaction of Condition 5(a) in
Appendix I to the Announcement.
3 Share Transfer
3.1 Offeror agrees with and undertakes to Offeree that it will acquire,
or procure the acquisition by a member of the Offeror Group of, at least one
Offeree Share prior to the Record Date.
3.2 Offeree agrees that it will procure that Offeror or such member of
the Offeror Group shall become the registered holder of the Offeree Share(s)
referred to in Clause 3.1 as soon as practicable and in any event on the Record
Date.
4 Share Exchange
4.1 Unless the Board of Offeree shall, at the time when such action
would otherwise have been required pursuant to this Clause 4.1, have withdrawn
(or modified in a manner adverse to Offeror) its approval or recommendation of
the transactions contemplated by this Agreement (whether before or after the
Court Meeting or the Extraordinary General Meeting) and Offeree shall, at such
time, have paid any amounts which are due to be paid at that time under Clauses
8.3 or 14.2, Offeree agrees to seek the earliest appropriate dates for the
relevant Court hearings, to instruct its registrars to despatch the Circular,
appropriate forms of proxy for use at the Court Meeting and the Extraordinary
General Meeting and, in the event of the Resolutions being passed by the
requisite majorities, promptly to apply to the Court for and diligently to seek
its sanction of the Scheme.
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4.2
4.2.1 Offeror shall, subject to the Scheme becoming effective, issue to
Offeree Scheme Shareholders on the Record Date, the Consideration Stock. For
each Offeree Share held by an Offeree Scheme Shareholder as at the Record Date
the holder will receive the Exchange Proportion of a share of Offeror Stock.
In this Clause 4.2.1. the following definitions shall apply:
Exchange Proportion means:
For each Offeree Scheme Share 0.16 of a share of Offeror Stock
save that no fraction of a share of Offeror Stock shall be issued to Offeree
Scheme Shareholders but in lieu thereof, each Offeree Scheme Shareholder on the
Record Date who would otherwise be entitled to such a fraction of a share of
Offeror Stock (after aggregating all fractions of shares of Offeror Stock to
which such Offeree Scheme Shareholder would otherwise be entitled) shall instead
receive cash (without interest) from Offeror as if any entitlement to a fraction
of a share of Offeror Stock to which such Offeree Scheme Shareholder would
otherwise have been entitled had been sold at the closing price of Offeror Stock
on NASDAQ on the Effective Date and converted into pounds sterling at the
mid-point of the closing spread of the US dollar to the pound sterling spot
rate, as shown in the Financial Times (U.K. edition) on the Business Day
immediately following the Effective Date.
4.3 If at any time during the period between the date of this Agreement
and the time for the calculation of the amount of Consideration Stock to be
issued under the Scheme any change in the outstanding shares of capital stock of
Offeror shall occur as a result of any capital reorganisation, reclassification,
stock split (including a reverse stock split) readjustment of shares, or any
stock dividend with a record date during such period the Consideration Stock
shall be adjusted equitably.
4.4 Offeree and Offeror agree that, subject to the requirements of the
Inland Revenue and the Panel on Takeovers and Mergers (where applicable), each
option over Offeree Shares granted prior to the Record Date under the terms of
the Employee Share Option Schemes shall (if the Scheme becomes effective) be
dealt with in accordance with the proposals to be made to optionholders in the
Employee Share Option Schemes in accordance with the Agreed Terms.
4.5 Offeree agrees to procure the agreement of the persons entitled to
receive Offeree Shares as final deferred consideration pursuant to the agreement
dated 29 October 1997 between Offeree and H.Thuillier and others relating to the
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purchase of Fraser Associates plc (the Fraser Agreement) (to the extent that
such Offeree Shares are not Offeree Scheme Shares) instead to receive the number
of shares of Offeror Stock determined by multiplying the Exchange Proportion of
a share of Offeror Stock by the number of Offeree Shares comprised in such
consideration in full and final settlement of their entitlement to such Offeree
Shares failing which to deliver an opinion of Counsel instructed by Offeree to
appear on its behalf in connection with the Scheme, addressed to Offeror, in
terms reasonably satisfactory to Offeror confirming that notwithstanding the
terms of the Fraser Agreement and any entitlement to such consideration, in the
absence of such agreement the proposed amendment to the articles of association
of Offeree referred to in Condition 2(b) shall operate to cause any Offeree
Shares issued as such consideration to be acquired by a member of the Offeror
Group in exchange for an issue of shares of Offeror Stock as therein provided
following such amendment.
5 Consideration
The Consideration Stock shall be validly issued, fully paid,
non-assessable and free of Encumbrance and shall rank pari passu in all respects
with the Offeror Stock then in issue, including the right to receive and retain
any dividends and other distributions declared, made or paid after the Effective
Date.
6 The Special Meeting
As soon as reasonably practicable after the date of the Announcement
and after such document has been approved by the SEC, Offeror will disseminate
the Proxy Statement to the Offeror Stockholders entitled to vote at the Special
Meeting.
7 Co-operation
Each of the parties shall promptly provide such assistance and
information as may reasonably be required by any of the others for the purposes
of or in connection with the Circular and the Proxy Statement including, without
limitation, any that may be required by any regulatory authority.
8 Undertakings
8.1 Offeror agrees to instruct Counsel to appear on its behalf at the
hearing of the petition to sanction the Scheme and to undertake to the Court to
be bound thereby.
8.2 Offeror and Offeree undertake promptly to notify each other (and
supply copies of all relevant information) of any event or circumstance of which
they
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become aware that would be likely to have a significant impact on the
satisfaction of the Conditions.
8.3
8.3.1 In consideration of the commitment of time, cost, expense and
personnel by Offeror and of Offeror incurring the expense of instructing
advisers for the purpose of investigating, finalising and documenting the
Merger, Offeree represents, warrants and undertakes that, during the Exclusivity
Period, it will not and will procure that none of its Affiliates, Advisers or
Representatives, or those of any member of the Offeree Group, will solicit,
initiate or knowingly encourage (including by way of furnishing information), or
enter into discussions or negotiations regarding, any Takeover Proposal from
any person or any acquisition or disposal of assets by Offeree other than in the
ordinary course of its existing business.
Provided that Offeree may engage in discussions or negotiations with,
and furnish information concerning Offeree, the Offeree Group, or their
businesses, properties or assets to, a third party which has made an unsolicited
Takeover Proposal if, and only to the extent that, the Board of Offeree
concludes, in good faith, after consultation with, and based upon the written
advice of, its outside counsel at a meeting of the Board, that the failure to
take such action would be in breach of the fiduciary duties of the directors of
Offeree or would violate the obligations of the Board of Offeree under the
provisions of the City Code, the Act and/or the rules and regulations of the
London Stock Exchange Limited and on the basis that (i) a copy of the written
legal advice, along with a copy of the minutes of such Board meeting reflecting
the Board's conclusion, shall promptly be provided to Offeror by Offeree and
(ii) Offeree shall promptly (but in any event within 24 hours) notify Offeror of
the receipt of any Takeover Proposal, including the material terms and
conditions thereof (to the extent known) (and any changes in the material terms
and conditions thereof of which it becomes aware) and the identity of the person
making such Takeover Proposal.
8.3.2 If Offeree is in breach of Clause 8.3.1, Offeree will pay to
Offeror damages equal to Offeror's reasonable costs and expenses incurred in
investigating and making the Merger up to the date of the breach, each of
Offeree and Offeror agreeing such amount to be a genuine pre-estimate of damages
suffered by Offeror. The maximum amount so payable shall not be equal to or
exceed the amount determined under Clause 8.3.4; such amount shall be paid
within 5 Business Days of demand.
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8.3.3 If Offeree defaults in the payment when due of any sum payable
under Clause 8.3.2, Offeree's liability shall be increased to include interest
on such sum from the date when such payment is due until the date of actual
payment at a rate per annum of 2% above the base lending rate from time to time
of Barclays Bank plc. Such interest shall accrue from day to day and shall be
included within the maximum amount determined under Clause 8.3.4.
8.3.4 In consideration of the commitment of time, costs, expenses and
personnel by Offeror, if on or before the expiry of the Exclusivity Period any
announcement is made by any third party with respect to a Takeover Proposal
(which Takeover Proposal is made and becomes unconditional in all respects or
otherwise effective), Offeree will pay to Offeror, within 7 days of demand, a
fee of the lesser of:
(i) $1,000,000; and
(ii) the largest sum as would not reduce the net assets of Offeree
as defined in Section 152(2) of the Act to a material extent,
Provided that, if Offeree has no net assets (as so defined), no such
sum shall be payable.
8.3.5 It is agreed that the maximum aggregate amount payable by Offeree
under the terms of Clauses 8.3.2, 8.3.3, 8.3.4, 8.10 and 14.2 shall not exceed
the lesser of $1,000,000 and the largest sum as would not reduce the net assets
of Offeree as defined in Section 152(2) of the Act to a material extent Provided
that, if Offeree has no net assets (as so defined), such amount shall be nil.
8.4 Offeror and Offeree shall each furnish to one another and to one
another's counsel all such information as may be reasonably required in
connection with the Proxy Statement and the Circular.
8.5 Offeree represents and warrants to Offeror that no information
furnished by Offeree in connection with the Proxy Statement or the Circular will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make any information so
furnished, in light of the circumstances under which it was so furnished, not
misleading in any material respect as of the date of the mailing of the Proxy
Statement or the Circular as the case may be and at the time of the Special
Meeting or the Court Meeting as the case may be.
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8.6 Offeror represents and warrants to Offeree that no information
furnished by Offeror in connection with the Circular will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make any information so furnished, in
light of the circumstances under which it was so furnished, not misleading in
any material respect as of the date of the mailing of the Circular and at the
time of the Court Meeting.
8.7 Offeror represents and warrants to Offeree that no information to
be included in the Proxy Statement, or incorporated by reference in it, other
than information furnished by Offeree or its advisers in connection with the
Proxy Statement, will contain any untrue statement of a material fact or omit to
state a material fact (other than information concerning Offeree or its advisers
necessary to enable the Proxy Statement to comply with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder) required to
be stated therein or necessary in order to make any information so furnished, in
light of the circumstances under which it was so furnished, not misleading in
any material respect as of the date of the mailing of the Proxy Statement and at
the time of the Special Meeting.
8.8 Offeror represents and warrants to Offeree that the Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Offeror with respect to:
(i) information furnished by Offeree or its advisers in connection
with the Proxy Statement; or
(ii) the failure by Offeree or its advisers to provide information
concerning Offeree or its advisers necessary to enable the
Proxy Statement to comply with such provisions.
8.9 Offeror agrees to indemnify and hold Offeree (for itself and on
behalf of its directors and officers) harmless up to a maximum amount equal to
$1,000,000 from and against any and all losses, damages, liabilities, costs and
expenses to which Offeree may become subject arising from Offeror's breach of
Clauses 8.6, 8.7 or 8.8.
8.10 Offeree agrees to indemnify and hold harmless up to a maximum
amount equal to the Termination Fee (as defined in Clause 14.2) Offeror (for
itself and on behalf of its directors and officers) from and against any and all
losses, damages, liabilities, costs and expenses to which Offeror may become
subject arising from Offeree's breach of Clause 8.5.
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8.11 To the knowledge of Offeror, Offeror has not taken or failed to
take any action, which action or failure would of itself prevent the treatment
of the Merger as a pooling-of-interests under US GAAP.
8.12 To the knowledge of Offeree, Offeree has not taken or failed to
take any action or failure, which action or failure would of itself prevent the
treatment of the Merger as a pooling-of-interests under US GAAP. Offeree
undertakes to notify Offeror, as soon as reasonably practicable and in any event
prior to the publication of the Circular or so soon thereafter as a person
becomes an Affiliate, of the persons (in addition to the existing directors of
Offeree) who are, or may be, an Affiliate of Offeree, and to use all reasonable
endeavours to cause each such person to execute an Affiliate Letter in the
Agreed Form.
8.13 Offeror represents and warrants to Offeree that Offeror believes
that, on the basis of the facts and circumstances known to Offeror on the date
of this Agreement, if the Merger were completed on the date of this Agreement,
the Merger should be accounted for as a pooling-of-interest under US GAAP.
9 Announcement
9.1 Offeree and Offeror agree that the Announcement shall be released
to the London Stock Exchange Limited at or about 07.30 hours (London time) on
the Announcement Date.
9.2 During the Exclusivity Period, Offeree and Offeror shall, subject
to the requirements of law or any regulatory body or the rules and regulations
of any recognised stock exchange or the City Code or the Panel on Takeovers and
Mergers, consult together as to the terms of, the timetable for and manner of
publication of, any formal announcement, circular or publication to
shareholders, employees, customers, suppliers, distributors and sub-contractors
and to any recognised stock exchange or other authorities or to the media or
otherwise which either may desire or be obliged to make regarding this Agreement
or any matter referred to herein. Any other communication which Offeree or
Offeror may make concerning such matters shall, subject to the requirements of
law or any regulatory body or the rules and regulations of any recognised stock
exchange, be consistent with any such formal announcement or circular as
aforesaid.
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10 Assignment
This Agreement is personal to the parties to it and may not be assigned
in whole or in part.
11 Variation
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of Offeree and by Offeror.
12 Time of the Essence
Any time, date or period referred to in any provision of this Agreement
may be extended by mutual agreement between Offeree and Offeror but as regards
any time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
13 Costs
Save as provided in this Agreement, each party shall bear all legal,
accountancy and other costs and expenses incurred by it in connection with this
Agreement and the implementation of the Scheme and the Acquisition.
14 Termination: Termination Fee
14.1 Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated as follows:
14.1.1 by the mutual consent of Offeror and Offeree;
14.1.2 by either Offeror or Offeree, by written notice, if the
Effective Date shall not have occurred on or before 31 December 1999 and the
party seeking to terminate this Agreement pursuant to this Clause 14.1.2 shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
14.1.3 by Offeror, by written notice, if the Board of Offeree (through
its own action or though any agency, or otherwise) shall have:
15
<PAGE> 16
(i) withdrawn (or modified in a manner adverse to Offeror) its
approval or recommendation of the transactions contemplated
hereby; or
(ii) approved or recommended, or proposed publicly to approve or
recommend, any Takeover Proposal; or
(iii) failed to comply with its obligations under Clause 4.1
(subject as provided in that Clause);
14.1.4 by Offeror if any financial adviser to the Board of Offeree
appointed pursuant to Rule 3 of the City Code withdraws or in any way modifies
its consent (whether written or oral) to being named in the context of any
recommendation statement by the Board of Offeree to its shareholders regarding
the Acquisition; or
14.1.5 by either Offeror or Offeree if there shall have been a breach
by the other of the obligations referred to in Clause 2.1 with respect to any of
the Conditions, which if not cured would cause the Conditions not to be
satisfied, and such breach shall not have been cured within 15 days after notice
thereof shall have been received by the party alleged to be in breach, subject
in all cases to compliance with the City Code and the requirements of the Panel
on Takeovers and Mergers.
If this Agreement is terminated pursuant to this Clause 14.1., this
Agreement shall terminate (except for Clauses 8.5, 8.6, 8.7, 8.8, 8.9, 8.10,
9.2, 10, 11, 13, 14, 15, 16 and 17), and there shall be no other liability on
the part of Offeree (on the one hand) and Offeror (on the other hand) to the
other.
14.2 Subject to the provisions of this Agreement which are expressly
provided to survive termination, if this Agreement is terminated by Offeror
pursuant to Clauses 14.1.3, 14.1.4 or 14.1.5 (other than in circumstances
falling within Clause 14.3), Offeree shall pay to Offeror a fee (the
"Termination Fee") of the lesser of:
(i) $1,000,000; and
(ii) the largest sum as would not reduce the net assets of Offeree
as defined in Section 152(2) of the Act to a material extent,
in cash, such payment to be made promptly, but in no event later than the fifth
Business Day following a termination by Offeror pursuant to Clauses 14.1.3,
14.1.4 or 14.1.5 as the case may be less any payment previously made under
Clause 8.3,
Provided that, if Offeree has no net assets (as so defined), the
Termination Fee shall not be payable.
16
<PAGE> 17
14.3 If, during the Exclusivity Period, Offeror makes a commitment to
any third party regarding, or makes any announcement in relation to, an
acquisition or disposal of assets by Offeror for consideration representing
either alone or together with other such acquisitions or disposals, as the case
may be, in excess of US$40 million, Offeror will promptly (but in any event
within 24 hours) notify Offeree of the proposed acquisition or disposal,
including the material terms and conditions thereof (to the extent known) and
any changes in the material terms and conditions thereof of which it becomes
aware and the identity of the third party.
If the Board of Offeree concludes, in good faith, after consultation
with, and based upon the written advice of, its outside counsel at a meeting of
the Board, that it is required, as a result of such acquisition or disposal by
Offeror, to withdraw or modify in a manner adverse to Offeror its approval or
recommendation in respect of the Merger in order to comply with its fiduciary
duties or in order to avoid violating the obligations of the Board of Offeree
under the provisions of the City Code, the Act and/or the rules and regulations
of the London Stock Exchange, Offeree may withdraw or modify its approval or
recommendation in respect of the Merger, and shall not be in breach of any
clause of this Agreement as a result thereof.
14.4 If during the Exclusivity Period
(i) the Board of Offeror shall either prior to publication of the
Proxy Statement publish its decision not to proceed with the
Merger or following publication of the Proxy Statement
recommend that Inverness shareholders do not give the Offeror
Stockholder Approval, in either such case other than as a
result of the breach or non-satisfaction of one or more of
the Conditions (not caused primarily by the action or inaction
of Offeror) or termination of this Agreement pursuant to
Clause 14 or any event giving rise to payment of any amount
under Clause 8.3.2 or 8.3.4 or breach by Offeree of this
Agreement; or
(ii) Offeror shall be the subject of any Offeror Takeover Proposal
and Condition 2(c) in Appendix I of the Announcement is not,
or ceases to be capable of being, satisfied by 31 December
1999 other than as a result of the breach or non-satisfaction
of any other Condition (not caused primarily by the action or
inaction of Offeror) or of termination of this Agreement
pursuant to Clause 14 or any event giving rise to payment of
any amount under Clause 8.3.2 or 8.3.4 or breach by Offeree of
this Agreement,
17
<PAGE> 18
Offeror shall pay to Offeree a fee of $1,000,000 or such lesser amount
as shall have been determined to be the maximum amount that could be paid by
Offeree under any of Clauses 8.3 and 14.2, such payment to be made promptly, but
in no event later than the fifth Business Day following such event.
14.5 If the Board of Offeree resolves to take either of the courses of
action referred to in Clauses 14.1.3(i) or (ii), a written record of any legal
advice received by such Board in connection with such resolution, along with a
copy of the minutes of such Board meeting reflecting the Board's conclusion,
shall promptly be provided to Offeror by Offeree.
14.6 If such financial adviser as is referred to in Clause 14.1.4
withdraws or modifies its consent as referred to in that Clause, a written
record of any legal advice received by the Board of Offeree in connection with
such withdrawal or modification, along with a copy of the minutes of any board
meeting at which such withdrawal or modification was considered, shall promptly
be provided to Offeror by Offeree.
15 Notices
15.1 Any notice or other communication requiring to be given or served
under or in connection with this Agreement shall be in writing and may be
delivered by hand or by courier or sent by fax or by post to the party to be
served at its address stated in this Agreement or at such other address as it
may have notified to the other parties in accordance with this Clause 15.1. All
such notices or communications in the case of parties (1) and (2) inclusive
shall be given or served on Offeror. Any notice or other document sent by post
shall be sent by registered post (if both posted and for delivery within the
same jurisdiction) or by registered airmail (if posted for delivery outside the
jurisdiction in which it is posted), return receipt requested (or any
substantially equivalent service).
15.2 Any notice or document delivered or sent in accordance with Clause
15.1 shall be deemed to have been served:
15.2.1 if delivered by hand or by courier, at the time of delivery; or
15.2.2 if sent by fax, at 10.00am (local time at the destination) on
the Business Day at the destination after its transmission; or
15.2.3 if posted, at 10.00a.m. on the second Business Day at the
destination after it was put into the post if posted for delivery within the
same jurisdiction, or at
18
<PAGE> 19
10.00 a.m. (local time at the destination) on the fifth Business Day after it
was put in the post if sent by registered airmail.
16 Severance
If any provision of this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law, but
would be valid and enforceable if deleted in whole or in part or reduced in
application, such provision shall apply with such deletion or modification as
may be necessary to make it valid and enforceable but the enforceability of the
remainder of this Agreement shall not be affected.
17 Governing Law
17.1 This Agreement shall be governed by and construed in accordance
with the laws of England. Each party irrevocably agrees that the courts of
England are to have non-exclusive jurisdiction to settle any dispute which may
arise out of or in connection with this Agreement.
17.2 Each party irrevocably submits to the jurisdiction of such courts
and waives any objection to proceedings in any such court on the ground of venue
or on the ground that the proceedings have been brought in an inconvenient
forum. This Clause 17.2 is for the benefit of each party and shall not limit its
rights to take proceedings in any other court of competent jurisdiction.
In witness whereof this Agreement has been duly executed on the date first
mentioned on page 1.
SIGNED by /s/ Stanley Laybourne
on behalf of
INSIGHT ENTERPRISES, INC.
SIGNED by /s/ George Laplante
on behalf of
ACTION COMPUTER SUPPLIES
HOLDINGS PLC
19
<PAGE> 1
EXHIBIT 2.2
CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME OF ARRANGEMENT AND THE MERGER
1. The Merger is conditional upon the Scheme becoming effective by not
later than 31 December, 1999 or such later date as Offeree and Offeror
may agree and the Court shall approve.
2. The Scheme will become effective and binding following:
(a) approval by a majority in number representing three-fourths in
value of the holders of the Offeree Shares, present and
voting, either in person or by proxy, at the Court Meeting (or
any adjournment thereof);
(b) the passing of any resolutions required to implement the
Scheme and to amend the articles of association of Offeree in
the manner indicated in the paragraph headed "Structure of the
transaction" in the Announcement at the Extraordinary General
Meeting (or any adjournment thereof);
(c) the approval by the requisite majorities of votes of the
holders of Offeror Shares at the Special Meeting called for
the purpose of an amendment of Offeror's amended and restated
certificate of incorporation for the purpose of increasing the
authorised share capital of Offeror and the issuance of the
Offeror Shares pursuant to the Scheme; and
(d) sanction of the Scheme and confirmation of the reduction of
capital involved therein by the Court (in both cases, with or
without modification agreed by Offeror and Offeree), an office
copy of the Final Court Order being delivered for registration
to the Registrar of Companies in England and Wales and, in the
case of reduction of capital, registered by him.
3. Offeree and Offeror have agreed, subject as stated in paragraph 4 of
this Appendix, that the Merger will also be conditional upon the
following matters, and, accordingly, an office copy of the Final Court
Order will only be delivered for registration to the Registrar of
Companies in England and Wales if:
(a) Offeror and Offeree have received a letter from KPMG Peat
Marwick dated within two New York Business Days prior to the
date of the Final Court Order (with KPMG Peat Marwick first
having received a supporting letter from Deloitte & Touche,
auditors to Offeree in terms reasonably satisfactory to KPMG
Peat Marwick) confirming that the Merger should be treated as
a pooling of interests under U.S.
GAAP if the Scheme is consummated;
(b) except as disclosed in the Offeree annual report and accounts
for the year ended 28 August, 1998, or as disclosed in the
interim report of Offeree for the 26 weeks ended 26 February,
1999 or as otherwise publicly announced by delivery of an
announcement to the Company Announcements Office of the London
Stock
<PAGE> 2
Exchange prior to the date of this Announcement ("publicly
disclosed"), or as fairly disclosed in writing to Offeror
prior to the date of this Announcement (each and collectively
"Offeree Disclosed Matters"), since 28 August, 1998:
(i) no investigation or enquiry by any Third Party (as
defined in paragraph (c) below) having statutory or
regulatory competence (other than the Court) and no
litigation, arbitration proceedings, prosecution or
other legal proceedings to which any member of the
Offeree Group is or may become a party (whether as
plaintiff or defendant or otherwise) has been
threatened in writing, announced or instituted by or
remains outstanding against or in respect of any
member of the Offeree Group which, in any such case,
is material and adverse in the context of the Offeree
Group taken as a whole;
(ii) there has been no material adverse change in the
business, financial position, trading position or
profits or prospects of the Offeree Group taken as a
whole;
(iii) no contingent or other liability of any member of the
Offeree Group has arisen or has become apparent or
has increased which would or could reasonably be
expected materially and adversely to affect the
Offeree Group taken as a whole;
(iv) Offeror has not discovered regarding the Offeree
Group that:
(1) any written financial, business or other
information which has been publicly
disclosed at any time by any member of the
Offeree Group is misleading or contains
misrepresentations of fact or omits to state
a fact necessary to make the information
contained therein not misleading in any case
which has not subsequently and prior to the
date of this Announcement been corrected by
such disclosure, and, in any event, which is
material in the context of the Offeree Group
taken as a whole; or
(2) any written financial, business or other
information (except for forecasts,
statements of opinion, projections, budgets
or estimates) disclosed by or on behalf of
any member of the Offeree Group privately to
any member of the Offeror Group or its
advisers is misleading or contains a
misrepresentation of fact or omits to state
a fact necessary to make the information
contained therein not misleading in any case
which has not subsequently and prior to the
date of this Announcement been corrected by
such disclosure and, in any event, which is
material in the context of the Offeree Group
taken as a whole; or
(3) any member of the Offeree Group is subject
to any liability
<PAGE> 3
(contingent or otherwise) which has not been
disclosed in the Offeree Disclosed Matters
and which is materially adverse in the
context of the Offeree Group taken as a
whole;
(c) no government or governmental, quasi-governmental,
supranational, statutory or regulatory body, or court, or
trade agency, or association, or institutional or professional
body (or other person or body having statutory or regulatory
competence) in any jurisdiction (each and collectively a
"Third Party") has instituted, implemented or threatened to
take any action, proceeding, suit, investigation or inquiry,
or has made, proposed or enacted any statute, regulation or
order, or taken any other steps, which would or might
reasonably be expected to:
(i) make the Merger or Scheme or their respective
implementation or the acquisition of any shares in,
or control of, Offeree by Offeror or any member(s) of
the Offeror Group void, illegal or unenforceable
under the laws of any jurisdiction or otherwise
directly or indirectly restrain, prohibit, restrict,
delay or interfere with the implementation or
performance thereof or impose additional conditions
or obligations with respect thereto, or otherwise
challenge or interfere therewith, in each case in a
manner or to an extent that is material in the
context of the Merger; or
(ii) require, prevent or delay the divestiture or alter
the terms of any proposed divestiture by any member
of the Offeree Group or (in connection with the
Scheme) any member of the Offeror Group of all or any
portion of their respective businesses, assets or
property, or impose any limitation on the ability of
any of them to conduct their respective businesses or
own their assets or property or any part thereof and
which in any such case is material in the context of
the Offeree Group or the Offeror Group (in each case
taken as a whole), being the group on which such
requirement or imposition is made, as the case may
be; or
(iii) impose any limitation on, or result in any delay in
the ability of any member of the Offeror Group to
acquire, directly or indirectly, or to hold or
exercise effectively all or any rights of ownership
of any Offeree Shares held by any member of the
Offeror Group or on the ability of any member of the
Offeror Group to exercise management control over
Offeree or any member of the Offeree Group or on the
ability of Offeree or any member of the Offeree Group
or Offeror to hold or exercise effectively any rights
of ownership of shares or other securities (or the
equivalent) in any member of the Offeree Group held
or owned by it, in each case, in a manner or to an
extent which would be material in the context of the
Merger, the Offeror Group or the Offeree Group, as
the case may be; or
(iv) require any member of the Offeror Group or the
Offeree Group to offer to
<PAGE> 4
acquire any shares or other securities (or the
equivalent) owned by any third party in the capital
of any member of the Offeree Group or the Offeror
Group, in each case, in a manner or to an extent
which would be material in the context of the Offeror
Group or the Offeree Group taken as a whole, as the
case may be; or
(v) impose any limitation on the ability of any member of
the Offeror Group or any member of the Offeree Group
to integrate or co-ordinate its business, or any part
of it, with the businesses of any other member of the
wider Offeror Group or the wider Offeree Group in
each case in a manner or to an extent which would be
material in the context of the Offeror Group or the
Offeree Group, as the case may be; or
(vi) otherwise affect the business, financial position,
trading position or profits or prospects or value of
the Offeror Group or the Offeree Group, in each case
taken as a whole, in a manner which is material and
adverse;
and all applicable waiting and other periods during which any
relevant authority could have intervened, in respect of the
Merger or the implementation of the Scheme or the acquisition
or proposed acquisition of any shares or other securities (or
the equivalent) in, or control of, Offeree by Offeror, have
expired, lapsed or terminated;
(d) all necessary notifications and filings in any jurisdiction
have been made, all regulatory and statutory obligations in
any jurisdiction have been complied with, all necessary
waiting and other time periods (including any extension(s)
thereof) under any applicable legislation or regulations in
any jurisdiction have expired, lapsed or terminated, in each
case in respect of the Merger and the implementation of the
Scheme and the acquisition or proposed acquisition of any
shares or other securities (or the equivalent) in, or control
of, Offeree by Offeror or any member(s) of the Offeror Group
or in relation to the affairs of any member of the Offeree
Group and all authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and
approvals necessary or appropriate in any jurisdiction
(collectively "Consents") (in terms and a form satisfactory to
Offeror, acting reasonably) in respect of the Merger and the
implementation of the Scheme or the acquisition or proposed
acquisition of any shares or other securities (or the
equivalent) in, or control of, Offeree by Offeror or any
member(s) of the Offeror Group or in relation to the affairs
of any member of the Offeree Group, have been obtained from
appropriate Third Parties together with those (without
prejudice to the generality of the foregoing) from any persons
or bodies with whom any member of the Offeror Group or any
member of the Offeree Group has entered into contractual
arrangements (and which are in any event material in the
context of the Offeror Group or the Offeree Group taken as a
whole (as the case maybe)) and all such Consents, together
with all Consents necessary for Offeree to carry on its
business, remain in full force and effect and all filings
necessary for such purpose have been
<PAGE> 5
made or received and there has not been received any notice or
indication of any intention to revoke, suspend, restrict,
modify or not to renew the same;
(e) save as disclosed in Offeree Disclosed Materials, there is no
provision of any arrangement, agreement, licence, permit,
franchise or other binding instrument to which any member of
the Offeree Group is a party or by or to which any member of
the Offeree Group or any part of its assets may be bound,
entitled or subject (which is material in the context of the
Offeree Group taken as a whole) (collectively, "Offeree
Material Agreements") and which, in consequence of the Merger
or the Scheme or the acquisition or proposed acquisition of
any shares or other securities (or the equivalent) in or
control or management of Offeree or any member of the Offeree
Group by Offeror or any member(s) of the Offeror Group, could
or might reasonably be expected to (to an extent which is
material in the context of the Offeree Group taken as a whole)
result in:
(i) any monies borrowed by or other indebtedness or
liability, actual or contingent, of or grant
available to, any member of the Offeree Group being
or becoming repayable or being capable of being
declared repayable immediately or prior to its stated
maturity, or the ability of any such member of the
Offeree Group to borrow monies or incur any
indebtedness being withdrawn or materially inhibited;
or
(ii) the creation or enforcement of any liabilities or any
mortgage, charge or other security interest over the
whole or any part of the business, property or assets
of any member of the Offeree Group or any such
security interest (whenever and wherever arising or
having arisen) becoming enforceable; or
(iii) any such Offeree Material Agreement being terminated
or adversely modified or any unduly onerous
obligation or liability arising under or any action
being taken pursuant to such Offeree Material
Agreement; or
(iv) any assets or interests of any member of the Offeree
Group being or falling to be disposed of or charged
or any right arising under which any such asset or
interest could be required to be disposed of or
charged otherwise than in the ordinary course of
business; or
(v) Offeree or any member of the Offeree Group ceasing to
be able to carry on its business under any name which
it at present uses; or
(vi) the business, financial position, trading position or
profits or prospects or value of the Offeree Group
being adversely affected;
and no event has occurred which, under any such Offeree
Material Agreement, could reasonably be expected to result in
any event or circumstance referred to in
<PAGE> 6
paragraphs 3(e)(i) to (vi);
(f) since 28 August, 1998 and except as disclosed pursuant to
Offeree Disclosed Matters or as would be disclosed by a search
at the Companies Registry for England and Wales against
Offeree made as at the business day immediately preceding the
date of this Announcement:
(i) (save as between a wholly owned Subsidiary of Offeree
and Offeree or another wholly owned Subsidiary of
Offeree) no member of the Offeree Group has issued or
agreed to issue or authorised or proposed the issue
of additional shares of any class, or securities
convertible into, or rights, warrants or options to
subscribe for or acquire, any such shares or
convertible securities (save for any options granted,
and Offeree Shares unconditionally issued upon or
pursuant to the exercise of options granted, prior to
the date of this Announcement under the Action Share
Option Schemes and disclosed in writing to Offeror
prior to such date);
(ii) no member of the Offeree Group has recommended,
declared, paid, made or proposed to recommend,
declare, pay or make any bonus, dividend or other
distribution (save as between a wholly-owned
Subsidiary of Offeree and Offeree or another
wholly-owned Subsidiary of Offeree) other than the
interim dividend of 1.35p net per Action Share
announced on 14 April, 1999 and payable on 9 June,
1999 to Action Shareholders on the register on 10
May, 1999;
(iii) no member of the Offeree Group has made or authorised
or proposed or announced any material change in its
share or loan capital, outside the ordinary course of
business;
(iv) (save for transactions between a wholly-owed
Subsidiary of Offeree and Offeree or another
wholly-owned Subsidiary of Offeree) no member of the
Offeree Group has merged with or demerged or acquired
any body corporate or acquired or disposed of or
transferred, mortgaged or charged or created any
security interest over any assets or any right, title
or interest in any assets (other than in the ordinary
course of business) which is material to the Offeree
Group taken as a whole or authorised or proposed or
announced any intention to propose any acquisition,
demerger, disposal, or transfer as aforesaid;
(v) no member of the Offeree Group has authorised, issued
or proposed the issue of any debentures, or (save in
the ordinary course of business) incurred or
increased any indebtedness or contingent liability of
an aggregate amount which is material in the context
of the Offeree Group taken as a whole;
<PAGE> 7
(vi) no member of the Offeree Group has purchased,
redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or
other securities or reduced or made any other change
to any part of its share capital;
(vii) no member of the Offeree Group has entered into or
varied any contract (including any guarantee),
arrangement, transaction or binding commitment
(whether in respect of capital expenditure or
otherwise), which is of a long-term, unduly onerous
or unusual nature or magnitude or which is or would
be restrictive of the business of any member of the
Offeree Group or which involves or would involve an
obligation of such a nature or magnitude and which is
other than in the ordinary course of business and
which in each case is material in the context of the
Offeree Group taken as a whole;
(viii) except as referred to in this Announcement, neither
Offeree nor any of its Subsidiaries has entered into
or changed or made any offer (which remains open for
acceptance) to enter into or change the terms of any
contract (including any service contract) with any of
the directors of Offeree which is material in the
context of the Offeree Group taken as a whole;
(ix) no member of the Offeree Group has taken any
corporate action or had any legal proceedings
instituted against it for its winding-up (voluntarily
or otherwise), dissolution or reorganisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of all or any of its assets or revenues or any
analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction
(in each case in a manner which could reasonably be
expected to have a material adverse effect on the
Offeree Group taken as a whole);
(x) no member of the Offeree Group has been unable or has
admitted in writing that it is unable to pay its
debts or has stopped or suspended (or threatened to
stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a
substantial part of its business;
(xi) no member of the Offeree Group has waived or
compromised any claim which is material in the
context of the Offeree Group, taken as a whole;
(xii) Offeree has not made any alteration to its Memorandum
or Articles of Association (other than the
alterations agreed with Offeror to be proposed at the
Extraordinary General Meeting); and
(xiii) no member of the Offeree Group has entered into any
contract, commitment, agreement or arrangement or
passed any resolution with respect to, or announced
an intention to, or to propose to effect any of the
transactions,
<PAGE> 8
matters or events referred to in this paragraph 3(f);
(g) the Offeror Shares to be issued pursuant to the Scheme have
been approved for trading upon notice of issuance on NASDAQ;
(h) Offeror has not discovered that, save for Offeree Disclosed
Matters:
(i) any past or present member of the Offeree Group has
not complied with all applicable legislation or
regulations of any jurisdiction with regard to the
storage, carriage, disposal, discharge, spillage,
leak or emission of any waste or hazardous substance
or any substance likely to impair the environment or
harm human health, which non-compliance or any other
disposal, discharge, spillage, leak or emission which
has occurred would be likely to give rise to any
liability (whether actual or contingent) on the part
of any member of the Offeree Group and which is
material in the context of the Offeree Group taken as
a whole; or
(ii) there is or is likely to be any liability (whether
contingent or otherwise) to make good, repair,
reinstate or clean up any property now or previously
owned, occupied or made use of by any past or present
member of the Offeree Group, or in which any such
member may now or previously have had or be deemed to
have or have had an interest, under any environmental
legislation, notice, circular or order of any
relevant authority or to contribute to the cost
thereof or associated therewith or indemnify any
person in relation thereto, in any such case to an
extent which is material in the context of the
Offeree Group taken as a whole; or
(iii) circumstances exist whereby a person or class of
persons would be likely to have a claim or claims in
respect of any product or process of manufacture or
materials used therein now or previously
manufactured, sold or carried out by any past or
present member of the Offeree Group which, in any
such case, would be material in the context of the
Offeree Group taken as a whole;
(i) each Affiliate of Offeree has properly executed and delivered
to Offeror an Affiliate Agreement;
(j) each of the executive Directors of Offeree has properly
executed and delivered to Offeror on the day before the
Effective Date deeds of variation of their respective service
agreements in the terms from time to time agreed between such
executive Directors, Offeror and Offeree, subject only to the
Scheme becoming effective; and
(k) Offeree has performed its obligations pursuant to the Merger
Agreement in all material respects.
4. Offeror reserves the right, in its absolute discretion, to waive all or
any of conditions set out
<PAGE> 9
in paragraph 3 apart from paragraph 3(a), paragraph (b)(i) as read in
conjunction with paragraph 3(c)(i) and paragraph 3(g) which may only be
waived jointly by Offeree and Offeror.
5. Offeree and Offeror have agreed, subject as stated in paragraph 6 of
this Appendix, that the Merger will also be conditional upon the
following matters, and accordingly, an office copy of the Final Court
Order will only be delivered for registration to the Registrar of
Companies in England and Wales if:
(a) clearances have been received, in a form reasonably acceptable
to the Directors of Offeree, from the Inland Revenue under
section 138 of the Taxation of Chargeable Gains Act 1992 and
under section 707 of the Income and Corporation Taxes Act 1988
for transactions involved in the Scheme; and
(b) Offeree has not discovered regarding the Offeror Group that
any written, financial, business or other information (except
for forecasts, statements of opinion, projections, budgets or
estimates) disclosed by or on behalf of any member of the
Offeror Group privately to any member of the Offeree Group or
its advisers contains a misstatement of fact or omits to state
a fact necessary to make the information contained therein not
misleading in any case which has not subsequently and prior to
the date of this Announcement been corrected by such
disclosure, and, in any event, which is material in the
context of the Offeror Group taken as a whole.
6. Offeree reserves the right, in its absolute discretion, to waive either
or both of the conditions set out in paragraph 5.
7. The Scheme will not proceed if the proposed Merger is referred to the
Competition Commission before the date of the Court Meeting. In such
event, neither Offeror nor any holder of Offeree Shares will be bound
by any term of the Scheme.
<PAGE> 1
EXHIBIT 99.1
Company Press Release
Insight Enterprises to Merge With the U.K.'s Leading Computer Direct Marketer,
Action
TEMPE, Ariz.--(BUSINESS WIRE)--May 9, 1999--Leading computer direct marketer
Insight Enterprises, Inc. (Nasdaq:NSIT - news) and Action Computer Supplies
Holdings plc (LSE:ACS), the leading United Kingdom-based IT direct marketer,
announced today that they have entered into a definitive merger agreement to
create a global marketer of computers, hardware, software and services.
Insight will merge with Action in a tax-free exchange of shares valued
today at approximately $150 million, based upon the $26.625 closing price of
Insight's stock as of May 7, 1999. The combined companies have current
annualized sales of approximately $1.6 billion.
The terms of the merger agreement provide for holders of Action stock
to receive 0.16 shares of Insight common stock for each of their shares. Insight
expects to issue approximately 5.64 million new shares, representing 18.1%
ownership of the Company pro forma for the transaction. The merger is expected
to be accounted for as a pooling of interests and accretive to earnings per
share in 1999. The transaction is subject to customary closing conditions
including the approval of shareholders of both Insight and Action and required
U.K. regulatory approval. The transaction is expected to be completed in
September 1999.
"This merger vaults Insight to the next level and creates a leading
global direct marketer of brand name computer products and services with
business customers in the U.S., Canada, the U.K. and Western Europe. It
represents the continuation of our strategy of expanding our customer base and
geographic scope in important, attractive markets," said Tim Crown, President of
Insight. "Action is a tremendously innovative company and extremely well
positioned in the U.K. This is our largest transaction to date and Action
provides us critical mass in the U.K., which we entered in 1998."
Commenting further, Mr. Crown said, "Action's business model is highly
complementary to our own, and we have the opportunity to capitalize on our
experience in the U.S. to maximize Action's sales and operating performance.
Specifically, we believe we can:
1
<PAGE> 2
-- Consolidate Action's position as one of the largest independent
direct marketers of IT products in the U.K. through the integration of Insight's
existing operations, forming the platform for our European growth objectives.
-- Significantly increase our combined buying power to realize
purchasing savings, improved vendor support and product availability.
-- Enhance Action's sales growth by implementing Insight's successful
account management and proven outbound telemarketing strategies, leveraging
Action's extensive client relationships.
-- Capitalize on the sales and marketing expertise of our organizations
by integrating catalog operations and electronic commerce operations.
-- Enhance Insight's U.K. ISP and electronic commerce service sales by
accessing Action's business customer base."
Concluding, Mr. Crown commented, "Action's management team is talented,
internationally experienced and will enhance the strength and depth of our own.
Our management teams have a very similar culture and share a common vision of
creating the leading global direct marketer of IT products. Action, led by its
existing executives, will become our platform for further sales force and
e-commerce expansion into Europe."
Commenting on the merger, Henry Lewis, Chairman of Action said, "The
merger brings together two outstanding companies and provides a very attractive
premium for Action's shareholders. The combination of Action and Insight will
create a genuinely global group with extensive customer bases in five countries
and almost (pound)1 billion in current annualized sales. We will take advantage
of a wide range of synergies to increase our margins and accelerate our sales
growth. The merger will also offer new and exciting opportunities for our
employees and the potential for continued enhancement of shareholder value."
As a result of the pending merger transaction, the Board of Directors
of Insight has terminated the Company's previously announced stock repurchase
program. The Company had announced in August 1997 its intention to repurchase
1,687,500 shares (split adjusted), however there have been no repurchases since
the plan was initiated.
2
<PAGE> 3
About Insight
Insight is a global direct marketer of brand name computers, hardware
and software with locations in the United States, United Kingdom, Canada and
Germany. The Company markets primarily to small- and medium-sized businesses
comprised of 50 to 1,000 employees, through a combination of a strong outbound
telemarketing sales force, electronic commerce at www.insight.com, electronic
marketing and direct mail catalogs. The Company offers an extensive assortment
of more than 100,000 SKUs of computer hardware and software including such
popular name brands as Compaq, Hewlett-Packard, IBM, Microsoft, Seagate, Toshiba
and 3COM. Insight's knowledgeable sales force, aggressive marketing strategies
and streamlined distribution, together with its advanced proprietary information
system, have resulted in high customer loyalty and strong, profitable growth.
Insight's net sales for the 12 months ended March 31, 1999 were $1.134 billion.
About Action
Action is the leading U.K.-based IT direct marketer, offering a wide
range of computer products and services to small, medium and large businesses
with operations in the U.K. and Spain. Action markets its products and services
through a combination of direct mail catalogs, electronic commerce, outbound
telemarketing and field sales forces. The company offers over 13,500 brand name
computer products similar in range to that offered by Insight. Through its
dedicated service organization, Action offers a complete range of product-based
services such as pre-configuration, on-site maintenance, consultancy and desktop
installation. Action has been aggressively growing its electronic commerce
business with unassisted electronic ordering reaching 8.6% of sales for the 26
weeks ended February 26, 1999. Action's net sales for the 12 months ended
February 28, 1999 were (pound)282 million ($460 million).
For product sales or Company information call 800-INSIGHT or visit
www.insight.com.
The statements in this release regarding sales growth rates; gross
profit; selling, general and administrative expenses; and other statements of a
non-historical nature including statements regarding implementing strategies for
future growth are forward-looking statements that involve risks and
uncertainties. Such risks and uncertainties include fluctuations in operating
results, intense competition, management of rapid growth, need for additional
financing, past and future acquisitions,
3
<PAGE> 4
international operations, risks of business interruption, year 2000 issues,
reliance on outsourcing arrangements, changing methods of distribution, reliance
on suppliers, changes in vendor rebate programs, rapid change in product
standards, inventory obsolescence, sales and income tax uncertainty, increasing
marketing, postage and shipping costs, and dependence on key personnel. These
factors are discussed in greater detail under "Factors That May Affect Future
Results And Financial Conditions" in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, as filed with the Securities and Exchange
Commission.
Contact:
Insight Enterprises Inc., Tempe
Stanley Laybourne, 602/350-1142
(CFO, Secretary and Treasurer)
4
<PAGE> 1
EXHIBIT 99.2
INSIGHT ENTERPRISES, INC.
PRESENTATION TO U.S. INVESTORS
STATEMENTS IN THIS PRESENTATION THAT RELATE TO FUTURE PLANS,
EXPECTATIONS, EVENTS OR PERFORMANCE ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES, INCLUDING: PROJECTIONS OF MATTERS THAT MAY AFFECT SALES
OR NET EARNINGS; PROJECTIONS OF CAPITAL EXPENDITURES; PROJECTIONS OF GROWTH;
HIRING PLANS; PLANS FOR FUTURE OPERATIONS; FINANCING NEEDS OR PLANS; PLANS
RELATING TO THE COMPANY'S PRODUCTS; AND ASSUMPTIONS RELATING TO THE FOREGOING.
IN ADDITION, REFERENCE IS MADE TO THE "FACTORS THAT MAY AFFECT FUTURE RESULTS
AND FINANCIAL CONDITIONS" AS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM
10K FOR THE YEAR ENDED DECEMBER 31, 1998.
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 2
TRANSACTION OVERVIEW
- - Recommended share-for-share offer by Insight to Action shareholders
- - Exchange ratio of 0.16 new Insight shares for each Action share
- - Summary:
- Number of new shares issued 5,638M
- Action pro forma ownership 18.1%
- Premium to unaffected price 28%
- Transaction value $150MM
- - Shareholder votes targeted August
- - Closing expected September
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 3
STRATEGIC RATIONALE
- - Create global IT direct marketing leader in the U.S., the U.K., Canada,
Germany and Spain
- - Expand largest independent U.K. computer direct marketer
- - Create platform for continued European expansion
- - Add experienced international management
- - Leverage best practices of both companies
- Purchasing/vendor relationships
- Outbound direct marketing model
- E-commerce technology
- - Realize scale opportunities in U.K. operations
- Distribution
- Overhead
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 4
PRO FORMA INCOME STATEMENT
<TABLE>
<CAPTION>
INSIGHT ACTION COMBINED
LTM 3/99 LTM 2/99(1) LTM 3/99
- ----------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $1,134.1 $ 454.6 $ 1,588.7
- ----------------------------------------------------------------------
GROSS PROFIT 135.4 63.8 199.2
margin 11.9% 14.0% 12.5%
- ----------------------------------------------------------------------
SG&A 97.4 52.0(2) 149.4
margin 8.6% 11.4% 9.4%
OPERATING INCOME 38.0 11.8(2) 49.8
margin 3.4% 2.6% 3.1%
- ----------------------------------------------------------------------
NET INCOME 22.9 6.4(2) 29.3
margin 2.0% 1.4% 1.8%
- ----------------------------------------------------------------------
EPS
Basic $ 0.93 N/A $ 0.97
Diluted $ 0.89 N/A $ 0.93
</TABLE>
Notes: (1) Exchange Rate: L.1 = $1.602
(2) Excluding $1.6MM pre-tax exceptional charge ($1.1MM after tax)
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 5
COMPANY OVERVIEW
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 6
ABOUT ACTION
- - Largest independent U.K. direct marketer of IT products
- Operations in Spain
- - Founded 1981, public since July 1996
- - LTM February 1999 (UK GAAP)
- Sales L.282.4 $452.4
- Operating Profit 7.9 12.7
- Margin 2.8% 2.8%
- - Complementary business model
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 7
COMPLEMENTARY BUSINESS MODELS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
ACTION INSIGHT
- -----------------------------------------------------------------------------
<S> <C> <C>
TARGET Small, medium, large SMEs with 50 - 1,000
CUSTOMERS business customers employees
- -----------------------------------------------------------------------------
PRODUCT RANGE 13,500+ Wintel products 100,000+ Wintel products
- -----------------------------------------------------------------------------
PRICING Discounted Discounted
- -----------------------------------------------------------------------------
SALES Catalog Outbound telemarketers
APPROACH E-commerce E-commerce
Telesales/field sales and Catalog
service
- -----------------------------------------------------------------------------
DISTRIBUTION Centralized fulfillment "Virtual inventory"
- -----------------------------------------------------------------------------
GROWTH Organic plus acquisitions Organic plus acquisitions
- UK - US
- Spain - UK
- Germany
- -----------------------------------------------------------------------------
</TABLE>
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 8
ACTION'S MANAGEMENT
<TABLE>
<CAPTION>
YEARS WITH
EXECUTIVE DIRECTORS ACTION
<S> <C>
Henry Lewis 18
Chairman
George Laplante 8
Group Managing Director
Duncan Wilkes 8
Chief Operating Officer
Ian Wakelin 1
Finance Director
</TABLE>
DIRECTOR/EMPLOYEE OWNERSHIP 17.5%
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 9
SUMMARY FINANCIAL PERFORMANCE
(in Millions)
Net Sales
<TABLE>
<CAPTION>
Year Ended August 31,
<S> <C>
1995..................... $163.4
1996..................... $215.6
1997 .................... $275.7
1998 .................... $399.9
LTM 2/99................. $452.4
</TABLE>
CAGR 34.8%
Operating Profit
<TABLE>
<CAPTION>
Year Ended August 31,
<S> <C>
1995..................... $3.9
1996..................... $6.1
1997 .................... $8.5
1998 .................... $12.3
LTM 2/99................. $12.7
</TABLE>
CAGR 46.7%
Exchange Rate: L.1=$1.602. In U.K. GAAP. Operating profit before exceptional
items.
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 10
INDUSTRY
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 11
INDUSTRY OVERVIEW
Total - L.32.5 Billion
<TABLE>
<S> <C>
Consultancy ................. 20%
Other ....................... 12%
Software & Services ......... 46%
Hardware .................... 22%
</TABLE>
Source: Holway Report.
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 12
U.K. IT RESELLERS
<TABLE>
<CAPTION>
LAST
REPORTED
RESELLER REVENUE POSITION OWNERSHIP
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Computacenter L.1,586 VAR Public
- --------------------------------------------------------------------------
Specialist Computer 536 VAR Private
- --------------------------------------------------------------------------
Multi Vendor Computer 290E VAR Sub ICL
- --------------------------------------------------------------------------
Action 250 Direct Marketer Public
- --------------------------------------------------------------------------
Compel 210 VAR Public
- --------------------------------------------------------------------------
Elcom Ltd. 176 VAR US Public
- --------------------------------------------------------------------------
MicroWarehouse 132 Direct Marketer US Public
- --------------------------------------------------------------------------
Global Direct Mail 196 Direct Marketer US Public
(Total Europe)
</TABLE>
- HIGHLY FRAGMENTED - 2,000 + RESELLERS
- DIRECT MARKETING CHANNEL - L.1.1 BILLION ESTIMATED
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 13
BUSINESS STRATEGY
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 14
TARGET CUSTOMERS
- - Target customer base spans small businesses to large corporations
- No size or sector concentration
- - Minimum 500,000 U.K. business sites with PC's
- - Current penetration just 17%
- 146,000 contacts at
- 89,600 PC sites
- - Action receives estimated 20 - 25% of customer IT expenditures
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 15
PENETRATION BY TURNOVER BANDS
SIGNIFICANT REPRESENTATION (25%) IN L.100M+ COMPANIES
<TABLE>
<CAPTION>
0-2 2-5 5-10 10-25 25-50 50-100 100-200 200+
<S> <C> <C> <C> <C> <C> <C> <C> <C>
% of Universe 3 6 9 12 17 22 28 33
</TABLE>
TURNOVER BANDS IN L.M
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 16
PRODUCT RANGE
- - Widest U.K. product offering but more edited than U.S.
- - Selected every 60 days
- Leading brands
- Demand driven
- GM/Picks/Returns
- Empirical
- - 13,500 live catalog lines
- - Electronic range growing to 20,000
- - Additional 400 specials weekly
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 17
DATABASE CUSTOMERS
- - 95.25% retention
- - 21% of sites ordered in an average month
- - 6.7 orders per year
- - 91.7% (by value) on 30-day credit terms
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 18
KEY ACCOUNTS
- - 3,500 customers
- - Direct marketing/e-commerce plus...
- - Proactive sales teams
- - Customized web site
- - Tailored pricing
- - 100 quota carriers (telephone/field sales force)
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 19
SALES APPROACH
<TABLE>
<CAPTION>
ACCOUNT
CUSTOMER SEGMENT CATALOG DIRECT MAIL E-COMMERCE MANAGERS
- ---------------- ------- ----------- ---------- --------
<S> <C> <C> <C> <C>
DATABASE
- - <L.10,000 X X X
- - 86,100 sites
KEY ACCOUNTS
- - > L.25,000 X X X X
- - 3,500 sites
</TABLE>
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 20
ACTION'S CATALOG
- - Products selected on rigorous criteria
- - No charge to suppliers
- - Industry "Bible"
- - Focused distribution - customers only
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 21
DIRECT MAIL
- - Ability to segment customers
- - Ability to rapidly and cost effectively produce material
- - Target customers using mini-catalogs
- By product/supplier or
- By theme
- - Supplier funded
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 22
CUSTOMERS TARGETED BY
o Previous purchases
- Products purchased
- Products not purchased
- Time pattern
- Value
o Organization
- Size
- SIC
o Contact
- Job title
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 23
ELECTRONIC COMMUNICATION/COMMERCE
o Low cost model
- Reduced transaction costs
- Reduced communication costs
o Improved information flow
- Minute by minute update
- More data....
- ....on more products
- - L.12MM REVENUE FOR 6 MONTHS ENDED 2/99
- - UNASSISTED INTERNET SALES 8.6% OF TOTAL
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 24
SERVICE OFFERING
VARs Action
- ---------------------- -----------------
Solutions VS Configuration
Application software Maintenance
System design Upgrades
Software specification Project roll outs
Business processes Remote support
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 25
ACTION SERVICES
ACTION DELIVERS:
- - Clear choice of services
- - Clear definition of service levels
- - Itemized pricing
- - "Commodity" approach
ACTION RECEIVES:
- - Increase penetration: product sales
- - More customers
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 26
ACQUISITIONS
FRASER ASSOCIATES
- - L.3.5M purchase price
PRODUCT REVENUE:
- - L.31.0M (1997)
- - Siemens, Powergen, Mercedes Benz, Dorling, MEPC, Bodyshop
SERVICE REVENUE:
- - L.2.5M (1997)
- - Desktop installation, configuration, consultancy, support desks,
implementation and roll out
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 27
ACQUISITIONS
SHL RESELLER & SERVICE DIVISION
- - L.7.9M purchase price
PRODUCT REVENUE:
- - L.36.0M (1997)
- - Orange, RAC, General Accident, RTZ, BOC
SERVICE REVENUE:
- - L.12.0M (1997)
- - Break/fix maintenance, project management, consultancy, helpdesks
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 28
INFRASTRUCTURE
Administration, Sales & Sales Support Offices
- Alperton (45,000 sq. ft.)
- Buckingham (20,000 sq. ft.)
- Six sales/service offices
Southall Warehouse (77,676 sq. ft.)
- 11,500 catalog items in warehouse
- 280,000 catalog items picked per month
- 64,000 customer orders per month
- 800 units per month through repair
Heathrow Warehouse (20,314 sq. ft.)
- 5,000 customer specific configurations and tests per month
- 800 next day configurations per month
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 29
ACTION SPAIN
- - Founded in 1990
- - LTM 2/99 sales L.10.2MM
- - 6 months ended 2/99 PBT L.66M
vs. 1998 (L.54M)
- - New web site operational in July
- - Strong management team
<PAGE> 30
INVESTING LOW COST MODEL
- Web - transaction processing/information
- Single IT systems across companies
- Strong infrastructure to support acquisitions
- Single call center - April 1, 1999
- Productivity of sales force
- Consolidated facilities
- Continued attention to balance sheet
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 31
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED 6 MONTHS ENDED
AUGUST 1998 FEBRUARY 1999
----------------------- --------------------
<S> <C> <C> <C> <C>
Turnover L.249.6 +45.0% L.140.9 +30.3%
Gross Profit 34.9 +46.7% 19.4 +30.6%
Operating Profit 7.7(1) +45.2% 3.4 +7.4%
Pre-Tax Profit 7.1(1) +39.2% 2.7 -11.8%
Net Income 4.8(1) +50.0% 1.8 -14.6%
Inventory DSO 16.9 13.9
</TABLE>
Note: (1) Excluding L.990M pre-tax exceptional charge. In U.K. GAAP.
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 32
TRANSACTION RATIONALE
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 33
INSIGHT'S GLOBAL PRESENCE
[MAP]
Insight Canada - Montreal Oct. 1997
Insight UK-Workshop England - April 1998
Insight Direct, Canada - Montreal - Oct. 1998
Insight Germany - Dec. 1998
WHY GO GLOBAL?
- - Demand for PCs in Western Europe is growing
- - Acceptance of direct channel
- - Migration to E-commerce
- - Increased use of technology by businesses
- - Market ready to respond to Insight's model
- - Economies of scale - EDI shipping model
- - Localized front end, centralized back end
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 34
COMPLEMENTARY BUSINESS MODELS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ACTION INSIGHT
- --------------------------------------------------------------------------------
<S> <C> <C>
TARGET Small, medium, large SMEs with 50 - 1,000
CUSTOMERS business customers employees
- --------------------------------------------------------------------------------
PRODUCT RANGE 13,500+ Wintel products 100,000+ Wintel products
- --------------------------------------------------------------------------------
PRICING Discounted Discounted
- --------------------------------------------------------------------------------
SALES Catalog Outbound telemarketers
APPROACH E-commerce E-commerce
Telesales/field sales and Catalog
service
- --------------------------------------------------------------------------------
DISTRIBUTION Centralized fulfillment "Virtual inventory"
- --------------------------------------------------------------------------------
GROWTH Organic plus acquisitions Organic plus acquisitions
- UK - US
- Spain - UK
- Germany
- --------------------------------------------------------------------------------
</TABLE>
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 35
ACTION OPPORTUNITIES
<TABLE>
<CAPTION>
INSIGHT
------------------------- ACTION
1996 LTM 3/99 LTM 2/99(1)
-------- -------- -----------
<S> <C> <C> <C>
Net Sales $ 410.9 $1,134.1 $ 454.6
Gross Margin 13.7% 11.9% 14.0%
SG&A 10.8% 8.6% 11.4%
Operating Margin 2.9% 3.3% 2.6%
Inventory T/O 17x 43x(2) 21x(3)
</TABLE>
(1) Exchange Rate: L.1 = $1.602. Pro forma for U.S. GAAP.
Excludes $1.6MM exceptional charge
(2) Q1 annualized
(3) 6 months annualized
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 36
ACTION OPPORTUNITIES
- - Accelerate revenue growth
- Develop outbound model for U.K.
- Create global e-commerce platform
- Cross market existing products/services - ISP, computer services
- Improve product availability
- Provide global fulfillment to international customers
- Leverage Action's international marketing expertise to Insight U.K.
and Germany
- Develop dual branding strategy
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 37
ACTION OPPORTUNITIES
- - Achieve cost savings/efficiencies
- Leverage increased buying power
- Combine Insight U.K. operations with Action
- Capitalize on new scale economies - catalog, overhead, telephone
- Standardize web technology
- Implement virtual inventory model
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 38
COMPANY OVERVIEW
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 39
ABOUT INSIGHT
- - Leading worldwide direct provider of name brand computers, hardware and
software
- - Offers 100,000+ Wintel products at discounted prices
- - Products are sold primarily through outbound telesales and electronic
commerce
- - Well positioned for strong, profitable sales and earnings growth
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 40
INSIGHT'S INVESTMENT THESIS
- - Rapidly growing and highly fragmented market worldwide
- - Highly efficient business model
- - Global companies win
- - Superior financial returns
- - Maximizing growth through IS, IT and electronic commerce investments
- - Well-positioned for continued rapid, profitable growth
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 41
FINANCIAL PERFORMANCE REFLECTS
INVESTMENT THESIS
(in Millions)
Net Sales
<TABLE>
<CAPTION>
<S> <C>
Year Ended December 31,
1995 .............................. $ 272.1
1996 .............................. $ 410.9
1997 .............................. $ 627.7
1998 .............................. $1,002.8
</TABLE>
CAGR (54.5%)
Net Earnings
<TABLE>
<CAPTION>
<S> <C>
Year Ended December 31,
1995 .............................. $ 4.1
1996 .............................. $ 7.6
1997 .............................. $ 13.2
1998 .............................. $ 20.4
</TABLE>
CAGR (70.6%)
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 42
INDUSTRY OVERVIEW
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 43
U.S. PC SALES BY CHANNEL
(% of sales through
each segment)
1997
<TABLE>
<S> <C>
Other Retail .................... 13.5%
Vars ............................ 13.2%
Dealers ......................... 26%
DIRECT .......................... 27%
PC/Office Store ................. 20.3%
</TABLE>
% Chg in
Total units = 30,000,000 Units 80%
2001E
<TABLE>
<S> <C>
Other Retail .................... 13.3%
Vars ............................ 13.8%
Dealers ......................... 20.2%
DIRECT .......................... 31.5%
PC/Office Store ................. 21.2%
</TABLE>
Total units = 54,000,000
Source: Dataquest, December 1998
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 44
WORLD PC MARKET BY CHANNEL
(% of sales through
each segment)
1997
<TABLE>
<S> <C>
Other Retail .................... 12.2%
Vars ............................ 12.4%
Dealers ......................... 34.5%
DIRECT .......................... 27.9%
PC Store ........................ 13%
</TABLE>
% Chg in
Total units = 81,000,000 Units 72%
2001E
<TABLE>
<S> <C>
Other Retail .................... 11.7%
Vars ............................ 13.1%
Dealers ......................... 32.4%
DIRECT .......................... 29.3%
PC Store ........................ 13.5%
</TABLE>
Total units = 1,393,000,000
Source: Dataquest, December 1998
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 45
THE DIRECT CHANNEL
Direct Channel Growth is Due to:
- - Continued acceptance of channel by suppliers and computer literate end
users
- - Depth and breadth of product
- - Electronic commerce
- - Knowledgeable sales and technical staff
- - Fast delivery and superior customer support
- - Competitive pricing
- - Most efficient distribution model
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 46
BUSINESS STRATEGY
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 47
1999 BUSINESS STRATEGY
- - Outbound direct sales and E-commerce
- - Business and E-customer focused
- - Leading revenue and profit growth
- - Aggressively lower cost structure
- - Broadest offering of the best brands
- - Aggressively low prices
- - Best availability and delivery
- - Delightful customer experience
INSIGHT
- --------------------------------------------------------------------------------
<PAGE> 48
CUSTOMER MODEL
--------------
<TABLE>
<CAPTION>
SALES MODEL PREMIER FINANCIAL MODEL
- ----------- ------- ---------------
<S> <C> <C>
AZ Field Sales Low Marketing
Inside Acct. Mgmt. Fortune 1000 Low Sales Cost
Low Margin
Outbound Sales VIP Mod. Marketing
Small and Medium Mod. Sales Costs
Businesses Mod. Margin
Inbound Sales E-customer Mod. Marketing
Low Sales Cost
High Margin
</TABLE>
INSIGHT
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<PAGE> 49
TARGET CUSTOMERS
- - Small- and medium-sized businesses
- Computer literate end users
- Frequent, predictable purchasing behavior
- Demand leading technology and discounted pricing
- Require less technical support
- - 86% of net sales from business customers
- - Largest customer is approximately 1% of net sales
- - E-customers
INSIGHT
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<PAGE> 50
E-MARKETING/BRANDING STRATEGY
- - E-catalogs - product offerings via electronic mail
- - Advertising banners/links on the Internet
- - :15 second targeted television commercials
- - Print catalogs to SMEs and recent buyers
- - Customized email offers to manufacturers' customer lists
INSIGHT.COM
800-INSIGHT
INSIGHT
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<PAGE> 51
HOW INSIGHT USES TECHNOLOGY TO LEVERAGE OPERATIONS
- - Proprietary, fully integrated, real-time, company-wide information system
- - Electronic sales and marketing
- - Effective fulfillment and distribution infrastructure
- Virtual inventory through EDI direct ship
- Indianapolis, IN distribution facility for distance based shipping
advantages
We must maintain an
efficient, low-cost operational
infrastructure
INSIGHT
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<PAGE> 52
GROWTH STRATEGY
INSIGHT
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<PAGE> 53
GROWTH STRATEGY
- - Strong Sales Growth
- Penetrate further into existing customer base
- Increase market share
- Expand/Adjust product offering
- - Profitable Earnings Growth
- Leverage existing infrastructure
- Utilize emerging technologies
- - Expand Global Presence
INSIGHT
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<PAGE> 54
LEVERAGE INFRASTRUCTURE
- - Increase Account Executive productivity
- - Operational capacity
- - Outsourcing alliances
UTILIZE TECHNOLOGIES
- - Increase awareness and communicate with customers via cost-effective Web
and E-mail
- - Maintain state-of-the-art E-commerce sites
- - Cutting-edge computer information systems
- - Virtual inventory and build-to-order through EDI
INSIGHT
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<PAGE> 55
GROWTH OF ACCOUNT EXECUTIVES
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
<S> <C>
1994 ......................... 194
1995 ......................... 236
1996 ......................... 374
1997 ......................... 652
1998 ......................... 1,072
Q1 99 ........................ 1,062
</TABLE>
INSIGHT
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<PAGE> 56
ACCOUNT EXECUTIVE MATURITY
PERCENTAGE OF TOTAL ACCOUNT EXECUTIVES
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
<1 Year ...................... 64% 55%
1-2 Years .................... 20% 25%
2-3 Years .................... 6% 11%
3+ Years ..................... 10% 9%
</TABLE>
INSIGHT
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<PAGE> 57
FINANCIAL HIGHLIGHTS
INSIGHT
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<PAGE> 58
NET SALES
(in Millions)
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1995 ......................... $ 272.1
1996 ......................... $ 410.9
1997 ......................... $ 627.7
1998 ......................... $1,002.8
</TABLE>
CAGR 54.5%
<TABLE>
<CAPTION>
Quarter Ended March 31,
<S> <C>
1998 ......................... $ 206.8
1999 ......................... $ 338.1
</TABLE>
AGR 64%
INSIGHT
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<PAGE> 59
GROSS PROFIT PERCENTAGE
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1995 ......................... 14.7%
1996 ......................... 13.7%
1997 ......................... 12.6%
1998 ......................... 12.0%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended March 31,
<S> <C>
1998 ......................... 12.3%
1999 ......................... 11.8%
</TABLE>
Insight Expects Gradual GP% Decline
- - Industry-wide pricing pressures
- - Pricing/selling strategies
- - Market conditions
INSIGHT
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<PAGE> 60
SELLING, GENERAL AND ADMINISTRATIVE
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1995 ......................... 12.0%
1996 ......................... 10.7%
1997 ......................... 9.1%
1998 ......................... 8.7%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended March 31,
<S> <C>
1998 ......................... 8.7%
1999 ......................... 8.4%
</TABLE>
<TABLE>
<CAPTION>
Factors Contributing to Declining SG&A % HISTORICAL EFFECT FUTURE EFFECT
---------------------------------------- ----------------- -------------
<S> <C> <C>
Marketing efficiencies MAJOR MINOR
Sales productivity increases NONE MAJOR
Electronic commerce MINOR MAJOR
Economies of scale MINOR MAJOR
</TABLE>
INSIGHT
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<PAGE> 61
NET EARNINGS
(in Millions)
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1995 ......................... $ 4.1
1996 ......................... $ 7.6
1997 ......................... $13.2
1998 ......................... $20.4
</TABLE>
CAGR 70.6%
<TABLE>
<CAPTION>
Quarter Ended March 31,
<S> <C>
1998 ......................... $ 4.3
1999 ......................... $ 6.8
</TABLE>
AGR 57%
INSIGHT
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<PAGE> 62
NET EARNINGS BY QUARTER
(in Thousands)
<TABLE>
<S> <C>
Q1 '97 ....................... $2,746
Q2 '97 ....................... $2,951
Q3 '97 ....................... $3,526
Q4 '97 ....................... $3,995
Q1 '98 ....................... $4,333
Q2 '98 ....................... $4,703
Q3 '98 ....................... $5,185
Q4 '98 ....................... $6,229
Q1 '99 ....................... $6,807
</TABLE>
INSIGHT
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<PAGE> 63
DILUTED EARNINGS PER SHARE*
(in Millions)
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1995 ......................... $0.26
1996 ......................... $0.38
1997 ......................... $0.55
1998 ......................... $0.81
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended March 31,
<S> <C>
1998 ......................... $0.18
1999 ......................... $0.26
</TABLE>
* Retroactively reflects three-for-two stock splits effected in the form of
stock dividends payable on February 18, 1999 to the stockholders of record
at the close of business on January 25, 1999 and paid on September 8, 1998
and September 17, 1997
INSIGHT
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<PAGE> 64
DILUTED EPS* BY QUARTER
<TABLE>
<S> <C>
Q1 '97 ....................... $0.11
Q2 '97 ....................... $0.12
Q3 '97 ....................... $0.15
Q4 '97 ....................... $0.16
Q1 '98 ....................... $0.18
Q2 '98 ....................... $0.19
Q3 '98 ....................... $0.20
Q4 '98 ....................... $0.24
Q1 '99 ....................... $0.26
</TABLE>
* Retroactively reflects three-for-two stock splits effected in the form of
stock dividends payable on February 18, 1999 to the stockholders of record
at the close of business on January 25, 1999 and paid on September 8, 1998
and September 17, 1997
INSIGHT
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<PAGE> 65
SUMMARIZED BALANCE SHEET AT MARCH 31, 1999
- - Accounts receivable - $155 million
- - DSO - 41.7
- - Bad debts <.3% of net sales
- - Inventory - $20.7 million
- 43 times inventory turns
- 48% of shipments via EDI
- - $100 million line of credit
- - Equity - > $159 million
INSIGHT
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<PAGE> 66
INVENTORY LEVELS AND TURNS
Inventory Levels (in millions)
<TABLE>
<CAPTION>
At December 31,
<S> <C>
1996 ......................... 27.5
1997 ......................... 46.1
1998 ......................... 34.4
Q1 99 ........................ 20.7
</TABLE>
Inventory Turnover
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C>
1996 ......................... 17x
1997 ......................... 17x
1998 ......................... 26x
Q1 99 ........................ 43x
</TABLE>
INSIGHT
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<PAGE> 67
INSIGHT ENTERPRISES, INC.
INSIGHT
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