An investor group led by members of Linear Corp.'s management has proposed a friendly $12.25-per-share tender offer for all the company's stock as a prelude to taking the company private, Linear disclosed Wednesday.
The $38.6-million tender proposal is in apparent competition with a takeover bid initiated last month by Interactive Technologies Inc. of North St. Paul, Minn. On Wednesday, ITI exercised the option it obtained last month to purchase 1,131,000 Linear shares owned by Chairman William Schanbacher and President Ted Farrell, a block of Linear shares representing 37% of the total outstanding.
ITI said previously that if it exercised the option to buy Schanbacher's and Farrell's shares, it would consider extending the same offer to remaining Linear shareholders. ITI is paying Schanbacher and Farrell $12 per share cash, plus up to $2 per share in "earn-out" payments contingent on Linear meeting certain sales and earnings goals in fiscal 1988.
The latest tender proposal was submitted by Linear Executive Vice President Terry Holdt, 43, who joined the company last September from a management position at Irvine-based Western Digital Corp. Holdt said his group has lined up debt and equity financing for the tender offer but would not identify other investors.
His group's tender proposal, which is contingent on approval by Linear's board of directors, expires this afternoon. The offer is also contingent on a satisfactory completion of due diligence or investigation by the investor group into Linear's finances.
Holdt said his group is interested only in making a friendly tender offer for Linear. "The decision now rests with the board of directors. The clock is ticking on our offer," Holdt said.
Blaine Roberts, a La Jolla investment adviser who represents investors holding 8.6% of Linear shares, said he welcomed the Holdt group's proposal, describing it as a more certain offer for minority shareholders than the ITI offer. Roberts earlier had criticized the ITI offer as "inadequate." Roberts said his group is not a part of the Holdt-led investor group.
Roberts said ITI may fight to gain control of Linear by coming back to shareholders with a higher bid or simply sell the shares it has under option to the Holdt group.
Based in Carlsbad, Linear makes wireless home security systems and garage door openers marketed principally thorough Schlage Lock Co. and Amway. Linear reported net income of $2.3 million on sales of $41.9 million for the nine months ended Feb. 28.
ITI, which makes professionally installed home security systems, is about one-third Linear's size in terms of revenue, an ITI spokesman said. ITI Chairman Thomas Auth was unavailable Wednesday for comment on the new tender proposal.