Scantron of Tustin Agrees to Offer by Atlanta Firm

An Atlanta-based check-printing company has agreed to buy Scantron, a Tustin firm that manufactures test-scoring equipment and forms, in a stock swap valued at about $74 million, Scantron officials said Thursday.

Scantron will be merged into the John H. Harland Co. in a deal that should be final by the end of June, said John T. Saunders, Scantron’s president and chief executive.

Saunders said there are no plans to move the 16-year-old company or lay off any of its 420 employees. Scantron employs about 250 people at its Orange County manufacturing and printing plant and headquarters. The company also has printing plants in Pennsylvania and Puerto Rico and 50 sales and service centers in metropolitan areas throughout the United States and Canada.

“It’s really going to be business as usual,” Saunders said. “We will be operating as a wholly owned subsidiary of the John Harland Co. and retain our name identification, which is very strong.”

Growing Market Segment

What Harland lacks in name recognition, according to Saunders, it makes up for in financial strength. The company employs 5,200 and had $288 million in sales and $43.6 million in net income for 1987. Harland has a large and growing segment of the check-printing market, manufacturing one of every five personal checks written in the United States, according to a prepared statement.

“We have a very strong balance sheet, too,” Saunders said, “And with the strength of the consolidated balance sheet, we will expand in marketing programs, possible new equipment and also acquisitions of other companies.”

Until Harland officials made an overture three weeks ago, there were no plans to sell Scantron.

“They came to us and said, ‘We like the possible fit between our two companies, and would you hear what we have to say?’ ” Saunders said.

After a brief period of negotiation, the deal shaped up as follows: Upon final approval by Scantron shareholders and the directors of both companies, Scantron shareholders will receive .755 shares of Harland common stock for each of their Scantron shares.

Stock Up $3.675

At the end of February, Saunders said, Scantron had 4.2 million shares outstanding. Harland stock closed Thursday at $23.375 per share, unchanged from Wednesday, in trading on the New York Stock Exchange.

Scantron stock jumped $3.675 per share to close at $16.125 in over the counter trading Thursday.

Saunders said he and the other officers and directors of Scantron own or have options to purchase more than 400,000 shares of stock. At Thursday’s closing price, they will receive about $8 million for their shares.

Harland also has received a so-called “lock-up” option to purchase 1 million Scantron shares at $17.65 per share. The option, which Saunders said will allow Harland to recoup costs in the event of a bidding war, can be exercised until Sept. 15.

“This can sometimes discourage other offers,” Saunders said. “But this is a fair price . . . and we don’t anticipate a bidding contest.”

Pleased With Deal

Officials from both companies signed a letter of intent on Wednesday. Saunders, who will retain his position at Scantron once the merger is completed, said he is pleased with the deal.

“We went out and took a look at their headquarters in Atlanta,” Saunders said. “We met their key people and were very impressed with the financial characteristics of their company and their people and the high regard they had for the employees.”

Harland officials could not be reached for comment.