Computervision Urges Rejection of Prime Bid
Computervision Corp.’s directors urged shareholders Friday to reject Prime Computer Inc.’s $400-million takeover bid and said they were looking into buying or combining with another company.
Computervision’s directors were not specific about how they intended to offer their shareholders a better deal than the one offered by Prime, but urged them to wait before tendering their shares to Prime.
A merger of Prime and Computervision would create the world’s second-largest company, behind International Business Machines, in the field of computer-aided design and computer-aided manufacturing (CAD-CAM).
Prime’s offer of $13.50 a share extends to Jan. 26, when the company can begin accepting or purchasing tendered Computervision shares. Computervision has 29 million outstanding shares.
In composite trading on the New York Stock Exchange, Computervision closed down 12.5 cents to $14.
Computervision said its board instructed the company’s management to study alternatives to Prime’s offer, including a “business combination” or other transaction between Computervision and another company or the purchase of a company by Computervision.
Computervision spokesman Peter Connell refused to specify what companies Computervision was investigating.
Prime is based in Natick, Mass., and Computervision in Bedford, Mass., a neighboring town west of Boston.
Prime’s board of directors voted in December to pursue a merger with Computervision, a move that would put the new company in the top half of the Fortune 500 companies, with annual revenue of $1.5 billion.
Prime has concentrated on the minicomputer market, while Computervision has focused on the CAD-CAM computer industry. CAD-CAM products allow engineers to do design work on computer terminals.
Prime spokesman Joe Gavaghan said merger discussions have been conducted between Computervision and Prime since 1985.
However, Computervision President Robert L. Gable has said merger discussions have been limited to one business meeting more than two years ago and a few follow-up telephone calls with Prime officials. Connell said Gable “rejected the technical fit between the companies.”
In a Dec. 27 letter to Gable, Joe M. Henson, Prime president and chief executive, said the business combination between the companies was “so compelling” that Prime had to pursue it.
Prime has about 8,600 employees worldwide. The company reported a profit of $43.5 million on revenue of $693.9 million in the first three quarters of 1987, compared to net income of $32.7 million on revenue of $629.2 million in the same period of 1986.
Computervision, with 4,600 employees worldwide, posted a 1987 nine-month profit of $11.4 million on revenue of $408.6 million. That was up from $9.2 million on $358.2 million a year earlier. The 1987 period included one-time gains of $7.5 million.
