MSI, Target of Telxon Takeover Bid, Tells of Talks With Another Suitor
MSI Data Corp., hoping to stave off a takeover bid by rival Telxon Corp., said Tuesday that it is discussing the possible sale of the company to an unidentified third party.
Telxon has offered to purchase all of MSI’s stock for $17 per share, or $95 million, but MSI management has rejected that offer as “inadequate.”
MSI, a Costa Mesa technology firm, provided no details about the identity of the third party or whether or not that party has made a firm offer for the company.
Wall Street traders, evidently expecting Telxon or another bidder to top the $17-per-share offer, have driven the price of MSI’s stock well above that this week.
Stock Up Tuesday
MSI’s stock closed Tuesday at $18.875, up 37 1/2 cents, in American Stock Exchange trading. On Monday, the stock was up $1.50 a share to $18.50.
“The next logical jump is $19 or $20” a share, said Jeff Kilpatrick, president of Newport Securities Corp., a Costa Mesa brokerage. “If MSI is saying there is another buyer out there, that buyer will have to beat whatever higher offer Telxon might make.”
Telxon, based in Akron, Ohio, has said it may be willing to raise its all-cash tender offer for MSI stock. The offer is due to expire Oct. 7.
Telxon spokeswoman Jean Veatch declined to comment on MSI’s announcement that is it talking with another suitor.
MSI and Telxon are fierce rivals in the market for portable data entry terminals. The hand-held devices are used by supermarkets and other retail and wholesale companies for purposes such as inventory control.
MSI has been resisting Telxon’s takeover bid since it was launched Sept 12. The two companies, which already were suing each other, have added several more lawsuits to the fray since the takeover effort began.
MSI has filed a suit in federal court in Delaware seeking to block Telxon’s offer until MSI’s 3-year-old patent infringement suit against Telxon is settled. MSI’s new suit alleges, among other things, that Telxon initiated its takeover offer out of fear that it will have to pay heavy damages to MSI if it loses the patent suit.
Counterclaim Filed
Meanwhile, Telxon has filed a counterclaim asking the same court to nullify an anti-takeover plan approved hurriedly by MSI’s directors last week to thwart Telxon’s bid. MSI has filed papers seeking to have the poison pill plan declared legal under Delaware law.
Telxon’s counterclaim further alleges that MSI’s directors have breached their fiduciary duties by failing to negotiate with Telxon.
The suits have been filed in Delaware because both Telxon and MSI are incorporated in that state.
Newport Securities’ Kilpatrick said it will be difficult for MSI to remain independent because the Telxon offer has “put the company into play.”
“There is a 90% chance MSI will no longer be a public company within several months,” Kilpatrick said.
MSI COMMON STOCK: A SHORT PRICE HISTORY
September Price 8 $11.000 9* 17.375 12** 17.625 13 17.50 14 17.75 15 17.625 16 17.75 19 17.875 20 18.75 21 18.625 22 17.625 23*** 17 26 18.50 27 18.875
*Telxon announces intent to offer $17
per share for MSI Data stock.
**Telxon launches tender offer.
***MSI rejects Telxon offer.
