Compel, the growing and strongly profitable computer services group, has added another arm to its business. The group has purchased Pangaea, an internet-based business solutions group. The acquisition should be earnings enhancing as Pangaea secured profits of £571,670 on sales of £1.25m. Compel will pay up to £10.5m for the group. £2.5m will be paid up front in cash and shares, with a further £8m due depending on the performance of Pangaea. The deal is a further illustration of Compel's ambition to become a broadly based computer services group. Last year it renamed two of its three operating subsidiaries and also established Compelserve, a separate IT consultancy business. Despite a mild warning in September (relating to a slowdown in IT expenditure), house brokers SG Securities expect the group to deliver good growth in the current year. Last year it improved profits from £9m to £12.7m, and SG predict Compel should achieve profits of around £14m for the year to June 2000. At present levels, this leaves the group on a forward p/e of around 17, a significant discount to the software and computer services sector.