2 Firms Offer $300 Million to Buy Out Micom Systems
Micom Systems, put up for sale nearly three months ago because of a squabble between management and three dissident directors, said Wednesday that it has received a friendly buyout offer of about $300 million from two New York investment firms.
The investment firms--Welsh, Carson, Anderson & Stowe IV along with Warburg, Pincus Capital--are offering a base price of $15.62 for each of the 19.2 million shares in the Simi Valley maker of computer communications gear.
The investors said they want to sell two Micom units, Micom Interlan and Micom Digital, as part of the deal. The payment to Micom shareholders ultimately would be adjusted up or down depending on whether the investors get more than or less than $70 million from the divestitures.
If the units are not divested by the time the investment firms acquire Micom, shareholders would receive $12 a share and an IOU promising to pay them proceeds when a sale closes.
Will Consider Offer
Micom went on the block in April after the company scrapped a plan to buy the 22% stake held by three dissident directors, John and Sally Thornton of San Diego, who helped finance Micom over the years, and former chairman William Norred, who founded the company in 1973. The dissidents are said to have been upset at management over the company’s languishing stock price and for spending too much on a recent acquisition.
Micom initially offered in March to buy back nearly half of its stock--including the shares held by the dissidents--for $16 a share, or $144 million. But the company scrapped the offer after receiving overtures from possible buyers.
Raymond V. Thomas, Micom’s chief financial officer, said the company’s directors, who are not a part of the bidding group, will consider the offer next week. He said other potential suitors are showing interest, but added that the disclosed offer is the firmest one.
Andy Schopick, an analyst with Gartner Securities Corp., said the offer is too low because Micom made it clear that its stock was worth $16 a share only two months ago.
“Micom has basically established a floor. I think they will continue to move forward and hold discussions that will realize a value to the shareholders of at least $16 a share,” he said.
Bruce Anderson, one of the partners in Welsh, Carson, Anderson & Stowe, said his firm and its partner have considered making an offer for Micom since last year. He also confirmed that an informal offer was made by the firms then but was turned down.
Won’t Try Hostile Bid
Anderson defended the group’s bid, adding that there is no obligation to offer $16 a share in the wake of the canceled stock buyback.
“Fortunately, in this world you can bid anything you want,” Anderson said. “We looked at this three or four different ways and came up with the price.”
Anderson added that the group will not launch a hostile offer if Micom rejects the bid.
If the bid is successful, Anderson said, Micom’s two remaining businesses--its basic computer communications equipment operation and its catalogue business that sells computer-linking equipment and accessories--would be split into two companies.
Warburg Pincus’ investment holdings include a 20% stake in Mattel, the Hawthorne toy maker. Welsh Carson is a group of 50 limited partners with $500 million in funds it invests for corporate pension funds, wealthy families and university endowments.
Micom’s stock closed Wednesday at $14.75 a share, down 25 cents, in the over-the-counter market.
Times staff writer Chris Kraul in San Diego contributed to this story.
