Micom Tells of Suitors, Cancels Stock Buyback
Micom Systems, a Simi Valley maker of computer communications equipment, announced Tuesday that at least two groups are interested in buying the company.
Micom added that, as a result of the proposals, it will scrap a plan to spend $144 million to buy 9 million shares of its stock, or nearly half of its shares outstanding. About 4.8 million shares were to be bought for $16 each from three dissident directors, including founder William A. Norred, with 4.2 million shares bought at the same price on the open market.
Raymond V. Thomas, Micom’s chief financial officer, would not comment on the announcement, except to say that no formal bids have been made and that potential suitors so far number less than five. The suitors were not identified. The company has retained two investment firms, Goldman Sachs and Volpe & Covington, to evaluate the proposals.
Bid Spurned
Securities analysts said the disclosures mean that Micom is likely to be sold because more than one buyer is interested and because the three dissident directors, who together control about 25% of the Micom’s stock, have made it clear that they want to sell their shares.
“You have a very large block of stock which has a for-sale sign on it,” said Gregory P. Francfort, who follows Micom for First Boston Corp. in New York.
Last September, Micom said it rejected a takeover bid from a company it refused to identify. It was widely speculated in the industry then that the suitor was Digital Communications Associates, a Alpharetta, Ga.-based, maker of equipment linking personal computers to mainframe models. A Digital Communications spokeswoman said the company had no comment on Micom’s announcement.
Analysts speculated that the suitors could include various minicomputer makers or foreign high-technology companies, particularly in Great Britain, seeking a foothold in the United States data communications market.
Micom has been considered a takeover candidate for some time. The company has about $55 million in cash and short-term securities and its debt is a relatively low $6 million. The company’s stock price tumbled from an all-time high of nearly $50 a share in early 1984 to as little as $6.50 last fall, although it has since recovered some.
On Tuesday, Micom’s stock jumped $2.625 a share in over-the-counter trading to $16.
$20 Seen as Tops
In canceling the buyback program, analysts speculated that Micom executives probably believe that they can fetch at least $16 a share, or about $307 million. Micom would only say that the proposals were higher than the market price, which at the time of the announcement was $13.375.
“I think the case can be made for $18, with $20 the upper limit,” said Andy Schopick, an analyst with Gartner Securities in Stamford, Conn.
