Micro D Inc. Set to Acquire First Software

Micro D Inc. of Santa Ana said Friday that it had agreed to acquire First Software Inc. of Massachusetts for $16 million in stock. Micro D will issue about 3.95 million shares of its common stock to First Software stockholders in return for all of the First Software shares, according to Lorraine Mecca, Micro D’s founder and chief executive.

Micro D currently has approximately 6.7 million shares of common stock outstanding. If the merger is approved by both company’s shareholders this fall, as well as a host of government agencies, Micro D’s outstanding shares will jump to almost 11 million.

“This merger means immediate national dominance” of the micro computer hardware and software market for Micro D, said Mecca, whose company celebrated its sixth birthday on Friday. “We are going from being competitors to being the largest micro-computer hardware and software distributor in the world.”

Mecca said the two companies have complementary strengths.

Micro D, with sales of $114 million last year, has strong sales of computer machinery in the western United States, while First Software, a privately held company with $60 million in 1984 sales, primarily sells computer programs in the eastern past of the country.

Mecca said she will remain as Micro D’s chief executive officer until the merger is approved. The 36-year-old executive, who owns 51%, or 3.4 million shares of Micro D, said that after she spends a short time as a consultant to the combined firms, she will use her expertise to go on to “bigger and better things,” She declined, however, to be more specific about her plans.

The merged company will likely retain the Micro D name, Mecca said, but will be run by a new management team headed up by First Software executives Rick Faulk and Kenneth Carpenter.

Micro D’s stock closed Friday at $4.25, up 50 cents.