Telematics Completes Acquisition of Protocol

Telematics International, a Fort Lauderdale, Fla.-based data communications company, said Monday that it finished its $6.46-million acquisition of Protocol Computers, a troubled Calabasas manufacturer of devices that allow non-IBM computers to communicate with IBM computers.

The sale’s terms call for Telematics to pay Protocol Chairman Richard L. Swarz, the company’s founder and controlling shareholder, with a 52.4% stake, $1.04 for each of his more than 2.8 million shares, or $2.91 million. Other shareholders received $1.40 for each of their 2.5 million shares, or $3.55 million.

Ed Savage, Telematics’ vice president of finance, said Swarz was willing to accept a lower price for his shares because he was eager to sell the loss-plagued company. Bret Maxwell, an analyst who followed Protocol for First Analysis Corp. in Chicago, speculated that Swarz may have structured the sale that way to placate venture capital firms that invested in the company.

Protocol executives did not return telephone calls.

In the fiscal year ended Sept. 30, Protocol lost $3.5 million on sales of $9.9 million, versus earnings of $884,000 on revenue of $15.8 million the previous year. Earlier this year, Swarz ousted two prominent local computer-industry executives, former Informatics General Chairman Walter Bauer and former Dataproducts Chairman Graham Tyson, as board members and replaced them with his wife, Sandra, and his secretary, Helen Braitman.

Savage said Telematics plans to operate Protocol as a subsidiary and expects to retain the company’s 70 employees, including President Paul Singh.

Savage said Telematics, a privately held company founded in 1982 by former executives with Maynard, Mass.-based Digital Equipment and Modular Computer Systems in Fort Lauderdale, had revenue last year of about $12 million and expects revenue of about $30 million this year. The company makes switches similar to Protocol products used to connect computer users with computers in various locations.