Hanover offloads office technology

Hanover chairman Mark Hotchin, left, and executive director Andrew Schmidt. Picture / Glenn Jeffrey

Eric Watson and Mark Hotchin's finance company, Hanover Group, has sold its office technology business to a management-led consortium for $150 million.

The deal is part of a plan to focus on financial services. The group is already sizing up acquisitions in New Zealand and Australia, including Pacific Retail Finance, put up for sale by Watson's Pacific Retail Group.

Hotchin, who is Hanover's chairman, said: "Hanover ... intends to develop its investment banking activities to support and complement the finance businesses."

Hanover had considered a flotation of Onesource, which includes the Konica Minolta photocopy business and telecommunications equipment supplier Cogent Communications, as well as an office equipment finance business.

But Hotchin said it received a better price by selling the business to management. At the same time, Hanover would not have been able to quit the business in its entirety if it had been floated on the sharemarket.

He said Pacific Retail Finance was not a great fit with Hanover and dismissed talk that the deal was connected to Hanover's possible tilt at the business.

Hanover's interest in Pacific Retail Finance has unsettled other buyers.

They fear Watson's 70 per cent stake in PRG and his 50 per cent holding in Hanover will insulate him from any overpayment and may, in fact, encourage him to overpay if his heart is set on owning the business.

PRG, which is rapidly becoming a holding company for its cash-hungry British appliance chain PowerHouse, is expected to conclude the sale of its finance arm soon.

Hotchin said Hanover, with $1.5 billion of assets and a customer base of more than 30,000 investors, was expecting a record financial result.

It acquired U-Bix and Leasing Solutions in April 2001. The New Zealand business of Minolta was bought last year and merged nationally with Onesource's U-Bix and Konica operations.

The management buyout was negotiated by Hanover executive director and Hanover Investments chief executive Andrew Schmidt.

Management were financed into the deal by Australian venture capital group Archer Capital.