Alpha Micro Tentatively OKs Third Suitor
Alpha Microsystems, the Costa Mesa computer maker that is under pressure from two unsolicited takeover bids, said Monday that it has tentatively agreed to a buyout by a new suitor, TeleVideo Systems of Sunnyvale, Calif., for $8 a share in cash and stock.
The $25.5-million TeleVideo deal came together last weekend after Alpha Micro executives had scrambled for almost two weeks to find an acceptable alternative to two bids for control of the company earlier this month.
One of those bids was a $6-a-share offer for half the company’s stock from Point 4 Data Corp. of Tustin.
The other came from Alpha Micro’s two co-founders, who were soliciting shareholder proxies to gain control of the board of directors.
Desktop Computers
TeleVideo makes video screen terminals and desktop computers.
“This is a very positive deal for Alpha Micro,” said Richard Cortese, chairman and chief executive. “The combined company will be a major player in the market at a time of consolidation.” Cortese said he felt relieved after two weeks of tension and uncertainty. Executives from Point 4 declined to comment on the latest developments, but a spokeswoman said the company might respond today.
Robert Hitchcock and Richard Wilcox, Alpha Micro’s co-founders, are supporting the sale to TeleVideo and are prepared to drop their proxy fight, said Harry Hathaway, their attorney. Hitchcock and Wilcox have been trying to unseat the company’s current management because of “violent disagreements” over strategy.
The two men were unavailable for comment, but Hathaway said that they are satisfied that $8 a share is a good price and that they are more aware now of the “tension and acrimony that would come from a proxy battle.” The co-founders own 25.2% of Alpha Micro’s stock.
Reserving Judgment
However, Hathaway said that certain unspecified “minor details” remain to be worked out and that his clients are reserving judgment on the deal until those matters are settled.
Although both Alpha Micro and TeleVideo have been beset by financial and marketing problems for the last 18 months, analysts said the combination of the two could produce a company that plays off Alpha Micro’s strong sales and service network as well as TeleVideo’s $70-million cash reserve and its inexpensive offshore manufacturing facilities.
Furthermore, analysts agreed that the combined company, which would have almost $150 million in annual sales, may approach the size required to withstand ongoing turbulence in the high-tech industry, which has seen scores of smaller companies fold or severely contract.
“They are building a mass that will help them survive,” said Donald Sinsabaugh, an analyst with Swergold, Chefitz & Sinsabaugh, a New York securities firm. “I see it as a very good move.”
Still, some analysts remained skeptical that a marriage of two weakened companies could produce a stronger player. In their latest fiscal years, Alpha Micro lost $3.5 million on sales of $48 million and TeleVideo lost $19 million on sales of $103 million.
The terms of the purchase call for TeleVideo to pay half the $8 purchase price in cash and the remainder in TeleVideo stock. Other details were not released.
Alpha Micro, which is to operate as an independent, wholly owned TeleVideo subsidiary under its current management, said it expected the deal to be completed within five months.
