Sanderson

Chairman Chris Winn has pulled off a smart deal at software seller Sanderson (SND) by offloading its high street retail business for £11.5m cash.

The well-documented troubles on the high street, as evidenced by the recent collapse of Past Times and Peacocks, have not proved a great trading backdrop for Sanderson. With this in mind, it has secured a deal to sell its multi-channel retail arm to leading technology provider Torex.

Interestingly, the price paid equates to 93 per cent of its market value prior to talks, yet the business amounted to less than half of Sanderson. The move will eliminate all group debt and leave the AIM-listed company with a net cash pile of £4m, which will be used to target future acquisitions. It may also allow for increased pension repayments, to fund an increased dividend or even pay a special dividend.

In recent months, the retail software space has undertaken a period of consolidation, so the disposal makes sense and represents fair value for shareholders. Speaking to Growth Company Investor, Winn added that 'the retail arm is a quality business with strong management, but we believe that both the timing and price make sense'.

Sanderson is still left with a decent manufacturing and online operation. House broker Charles Stanley forecasts 2012 sales of £13.8m, pre-tax profits of £1.8m and EPS of 3.8p. We urged readers to buy at 27p in November, and after the recent rally this remains our view.