Armor Group forced to abandon acquisition after spending $2m on fees

Armor Group, the security company chaired by former defence secretary Sir Malcolm Rifkind, said yesterday that the credit crisis had forced it to abandon a planned strategic acquisition. The company said it would write off $2m (990,000) in professional fees incurred during the negotiation process.

The company was caught off guard as its share price fell by more than 40 per cent after a profits warning last week, when it lost more than 20p to close at 29.5p on the day, and a tighter market made it harder to raise the debt required for the proposed deal. Armor said a combination of these factors had made the transaction uneconomical.

A spokesman for the company declined to name the target, saying that the two parties have agreed to keep the details confidential. He added that the company would consider reviving the transaction when it was more feasible.

Armor, which is currently scouting for a new chief exec-utive after a recent announcement confirming David Seaton's departure, has also been hurt by the weak dollar. In its trading statement last week, it said that the depressed greenback, the company's primary operating currency, had cost the business around $900,000.

The company also said that its operating profit for 2007 would be lower than what it earned last year. Commenting on the problems, Sir Malcolm said the past year had been a "disappointing and frustrating period" for the company.

Shares in Armor Group gained 1.25p to 27.25p yesterday.