Memorex to Buy Telex for $911 Million
Memorex International NV will acquire Telex Corp. in a deal valued at about $911 million, and New York financier Asher B. Edelman will drop a rival bid under an agreement announced Monday.
The agreement ends a nine-week takeover battle waged by an Edelman-led investment group, which will receive a $9.47-million payment in exchange for withdrawing its bid.
Telex and Memorex officials said that under terms of a definitive agreement, a unit of Memorex, the Dutch computer equipment maker, will acquire 90% of Telex’s outstanding common shares for $56 per share in cash and a new issue of preferred stock with an indicated value of $6.
After completion of the tender offer, the Memorex unit would merge with the parent company. Based on Telex’s 14.7 million common shares outstanding, the merger would have a value of about $911.4 million.
Telex disclosed Memorex’s offer Dec. 7.
The tender offer and subsequent merger are contingent on sufficient financing and regulatory approval being obtained, and on a majority of Telex’s shares being tendered.
Telex gained $3.25 to close at $56 a share on the New York Stock Exchange.
The Edelman group’s outstanding bid offered $55 a share for 10.5 million of Telex’s outstanding shares. The group on Oct. 8 initially offered $65 a share for all outstanding shares but revised the bid late last month.
Edelman’s group controls 1.1 million Telex shares, or about 7.8% of the outstanding stock.
Under the agreement with Edelman’s group, the companies will end all outstanding litigation between them, while Edelman agreed not to mount a takeover attempt of Telex for 10 years if the merger were consummated. The Edelman group will receive a $9.47-million payment, which the group said would cover expenses related to its hostile tender offer.
Telex also will suspend a $775-million recapitalization plan that it had proposed as an alternative and apparent defensive maneuver.
Memorex, headquartered in London, is a Dutch concern that manufactures computer components in Belgium, Ireland and at a plant in Milpitas, Calif. The Memorex name is used on audio- and videotapes manufactured by Tandy Corp.
The company said it had revenue of more than $1 billion and operating profit of more than $100 million in the fiscal year ended Nov. 30.
Telex, which reported annual sales of about $840.7 million last year, produces computers, electronics communications equipment and audio devices.
“In discussions between our two firms, it became quite apparent that a combination of Memorex and Telex would be very beneficial, providing expanded opportunities for the customers and employees of both companies,” said Giorgio Ronchi, Memorex’s chief executive.
Telex President George L. Bragg, who was a Memorex executive before joining Telex in 1981, said the merger would enhance Telex’s international presence while increasing Memorex’s U.S. market share.
In making his hostile offer, Edelman indicated that he considered Telex to be a good strategic match for two other computer companies he controls--Datapoint Corp. and Intelogic Trace, both of San Antonio.
Telex and Memorex indicated that they planned to rename the parent company Memorex Telex NV.
Bragg said the merger will result in a reduction in the number of employees, but he said Telex hopes to avoid layoffs.
“We’re going to have adjustments in some areas,” Bragg said. “There will be some reductions. Exactly when and under what circumstances, I can’t tell you.”
He said the combined companies should have increased business, which should help ease the need for layoffs.
