Unisys Plans Timeplex Stock-Swap Deal
Unisys Corp. jumped into the network business Monday by announcing a plan to acquire Timeplex Inc. in a stock-swap deal with a current value of about $305 million.
Timeplex of Woodcliff Lake, N.J., is a leading supplier of long-distance networking equipment for voice and data communication. Unisys, the world’s third-largest computer company, said that it would make Timeplex the core of a new business named Unisys Networks.
The deal has been agreed to by the Timeplex board, but still requires the approval of the company’s shareholders.
The acquisition would be the first since Unisys was created last year in the $4.8-billion acquisition of Sperry Corp. by Burroughs Corp.
“I think it’s a very smart move” for Unisys, said Aharon Orlansky, an independent, New York-based computer analyst. “I think they bought the best company in the business.”
However, investors saw the cost of the deal as a potential negative for Unisys. The company’s stock fell to $30.50 a share Monday from Friday’s close of $32.625 a share.
Unisys said it would exchange one of its shares for each of the 10 million shares of Timeplex currently outstanding, as well as any of the 1.8 million authorized but unissued shares that are issued by the time the deal closes.
Timeplex stock rose to $29 a share from $26.75 a share. The fact that Timeplex stock remained below the acquisition value was an indication that investors were not betting Unisys would have to raise its offer to complete the deal.
The Unisys offer represents a 22% premium above the market value of Timeplex stock based on the price of the companies’ stock at the close of trading on Friday.
The actual value of the deal, however, will depend on the price of Unisys stock when the deal is closed, which could take several months.
Unisys Networks will design, build and maintain networks that manage all forms of information, including voices, data and images, for corporations and government agencies with far-flung operations, Unisys said.
Timeplex specializes in funneling data over so-called T-1 circuits, which are pipes capable of carrying more than 1.5 million bits of information per second.
“This acquisition launches Unisys as a major worldwide force in one of the fastest growing and most strategically important segments of our industry,” said W. Michael Blumenthal, Unisys’ chairman and chief executive.
Once the acquisition is completed, Edward Botwinick, chairman and chief executive of Timeplex, will become president of Unisys Networks and will be elected senior vice president of Unisys Corp.
In its first quarter ended Sept. 30, Timeplex’s profit fell to $4.9 million from $7.6 million a year earlier. The year-earlier results included a reduction in deferred taxes of $4.8 million. Revenue in the first quarter rose to $42.2 million from $33.3 million.
Unisys is a $10-billion information systems company with more than 90,000 employees. It has headquarters in Blue Bell, Pa., and Detroit.
