2 Groups Bid for Control of Alpha Microsystems

In an apparently unexpected series of events, Alpha Microsystems, a faltering Santa Ana business computer manufacturer, was hit Tuesday with two unsolicited bids for control of the company.

First, Point 4 Corp., a competing computer maker from Tustin less than half the size of Alpha Micro, launched a $9.5-million tender offer for nearly 50% of the company’s stock.

Then Alpha Micro co-founders Richard Wilcox and Robert Hitchcock, who control 25.2% of its stock, launched a proxy fight for control of the company’s board of directors. The move came just four days after Wilcox was replaced as company chairman by its chief executive, Richard Cortese, and Hitchcock was removed as vice chairman when the position was eliminated.

Alpha Micro officials said they are evaluating the proposals and do not expect to make a public comment until Thursday at the earliest.

Although officials from both Point 4 and Alpha Micro denied any connection between the two offers, analysts said the moves, which were announced within hours of each other, could hardly be viewed as coincidental.

According to officials at both companies, Point 4 and Alpha Micro board members had discussed a possible merger in the last several months as a strategy for surviving the ongoing shakeout and cut-throat competition among suppliers of computers for small businesses.

Opposed Merger

Wilcox and Hitchcock, who could not be reached for comment, were said to oppose any efforts to merge Alpha Micro, a factor that analysts suggested led to their being dropped as officers.

William Frank of Infocorp, a Silicon Valley market research company, speculated that the Wilcox-Hitchcock proxy fight was an angry response to the talks with Point 4 and their removal as officers late last Friday.

In a filing Tuesday with the Securities and Exchange Commission, Wilcox and Hitchcock said they intend to nominate a slate of at least four directors, including themselves, at the company’s annual meeting, for which no date has been set.

If successful in winning control of the board, they said they would consider replacing “certain members of current management.” The two also said they may purchase additional shares of Alpha Micro from time to time.

Samuel Navarro of Equity Research Associates, a New York stock analysis firm, suggested that Point 4 might have viewed the removal of Wilcox and Hitchcock as an opportunity to pick up their stock easily, leading Point 4 to move quickly with a tender offer.

“No matter what happened, these moves are all related,” Frank said.

However, there was less certainty on why Alpha Micro should be considered much of a prize. In the last 18 months, losses have reached a projected total of $4 million, including an estimated $200,000 in the quarter ended last week. Sales in the period have declined nearly 8% and are currently running at an annual rate slightly behind last fiscal year’s $48.1 million.

Further, analysts said there is little indication that the business computer market’s sluggishness, which is blamed for most of Alpha Micro’s problems, is about to turn around.

In fact, Alpha Micro’s business of providing mid- to low-price multiuser computer systems for small and medium-size companies is expected to continue to feel the worst of the industry’s pinch. IBM and other large, well-established competitors are taking the top of the market, analysts said, while cheap imports are siphoning off the bottom end.

But William Rigby, president of privately held Point 4, said Alpha Micro offered a combination of a strong customer base, an established sales network and advanced technology. Rigby, who has presided over Point 4’s surge in sales in the last three years to $20.5 million in fiscal 1986, said the two companies have similar strategies that could easily be combined.

He cited the companies’ reliance on independent sales distributors as a principal similarity and said the existing networks could be used to sell both Alpha Micro and Point 4 products. With an average price of about $25,000, Alpha Micro systems are at the lower end of the spectrum; Point 4 products carry an average price tag of about $50,000.

Although declining to reveal many details of the takeover proposal, Rigby said that if the deal goes through, the combined company would eventually be taken private.

The Point 4 offer, which becomes effective today, calls for the company to pay $6 per share for about 1.6 million Alpha Micro shares, or about 49.9% of its outstanding stock. The offer spurred Alpha Micro’s stock to $5.87 1/2, up $1.37 1/2 from the close Friday. The tender offer expires at midnight Sept. 30.

Although the Point 4 offer represents a 33% premium over the Friday trading price, analyst Navarro noted that the offer was still about one-third below his estimate that the company’s assets are worth about $8.20 per share.

Alpha Micro’s stock, which hit a high of $24 after the public offering in 1981, has been steadily slipping in the last two years and has traded at between $4 and $8 for the last 18 months.