Sale of Founder’s Stock Appears to End Struggle : Investors Acquire Bulk of ComputerLand
The long struggle over who owns ComputerLand, the biggest independent retailer of computers, appeared near an end Monday when the company announced the sale of most of the holdings of controversial founder William H. Millard to an investment group.
The price and other terms weren’t disclosed. But ComputerLand officials in Oakland said E. M. Warburg, Pincus & Co., a privately held investment firm based in New York, was acquiring “the substantial amount,” understood to be 80%.
Micro/Vest, a syndicate that won 20% of ComputerLand in a court case two years ago, will retain most of its stake under the deal, leaving it “the largest outside player” in the new ownership structure, said Herbert Hafif of Claremont, the group’s lawyer.
However, Millard is pressing ahead with his appeal of that jury verdict. If Millard prevails, he could emerge as a sizable minority owner.
Millard owned about 96% of ComputerLand, which he started in 1976, until the jury verdict in favor of Micro/Vest, a syndicate formed by ex-partners of Millard to collect on an old debt. The syndicate also was awarded some $141 million in damages.
An unspecified portion of Micro/Vest’s holdings--all of which remain in a court-administered trust during the appeal--is among the part of ComputerLand being acquired by Warburg, Pincus. A spokeswoman for ComputerLand said the outcome of the appeal will determine whether Millard or Micro/Vest will receive the proceeds from that part of the sale.
It was recently estimated that Millard’s unchallenged 76% ownership of the company is worth more than $200 million, though its value never has been tested in the market. The company had $1.45 billion in sales worldwide last year through its 800 franchises.
“Micro/Vest is extremely pleased with this sale,” Hafif said. “It is a good deal for Mr. Millard and for Micro/Vest, but best of all, it is a hell of a deal for ComputerLand.”
Officials of Warburg, Pincus declined comment on their plans for the company. ComputerLand asserted there is “no current intention to change management.”
In a statement, President Ken Waters said the new owners are capable of spending money to expand the operation. A spokeswoman said of the buyers, “Their intent is a long-term commitment to the company.”
Warburg, Pincus’ past investments reportedly have included the Ingersoll newspaper chain and Mattel, the toymaker. It manages $1.5 billion in venture capital funds and is a money manager, with $3.5 billion under management.
The controversial Millard, under siege both in court and from ComputerLand dealers unhappy with his policies, relinquished his management posts and voting power in the company last year and pledged to sell his holdings in ComputerLand.
About the same time, he moved his family from Oakland to the Northern Mariana Islands near Guam, considered a tax haven. The move prompted some to speculate that it was at least partly an effort to avoid paying taxes on the huge proceeds from his pending sale of ComputerLand stock.
More recently, Millard has been cooperating with the FBI in an investigation of alleged corruption among public officials on the Marianas. Millard reportedly said that public officials solicited bribes from him.
TOP COMPUTER DEALERS
Company U.S 1986 Computer Sales Tandy $1.10 billion ComputerLand 1.09 million Businessland 512 million Entre 454 million Sears 175 million MicroAge 165 million Inacomp 164 million Nynex 150 million The Computer Factory 130 million MBI 120 million
Source: Computer Reseller News
