$142-Million Bid by Supplier Approved by MSI Data Corp.
MSI Data Corp. of Costa Mesa, trying to fend off a hostile suitor, agreed Thursday to be acquired by one of its largest suppliers in a deal valued at $142 million.
The buyer, Symbol Technologies of Long Island, N.Y., is the dominant supplier of bar-code scanning equipment, which is used, among other things, to track inventory on supermarket shelves and scan prices of clothing in department stores. Symbol’s offer for MSI, which makes hand-held computer terminals, is worth $23 a share.
MSI is the target of a hostile takeover bid by its chief rival in the hand-held terminal business, Telxon Corp. On Wednesday, the Akron, Ohio, company sweetened its offer for MSI to $20 per share. It had launched a $17-per-share tender offer for MSI on Sept. 9.
Analysts also suggested that the bidding for MSI may not be over, although some discounted the possibility that Telxon would increase its latest offer. MSI’s stock jumped $1.75 per share Thursday to close at $23.25, slightly higher than Symbol’s offer. The stock was trading at about $11 before Telxon launched its offer.
Won’t Discuss It
“The market seems to still be expecting another bid,” said E. Lawrence Hickey, an analyst with First Analysis Corp. in Chicago. Analysts said they didn’t expect the bidding to rise much above $25 a share.
Officials at Telxon wouldn’t discuss the possibility of a higher offer.
MSI and Telxon control about 50% of the fast-growing market, now estimated at $500 million annually, for hand-held computer terminals. About 60% of MSI’s products are equipped with bar code readers, said Paul Schneider, MSI’s chief financial officer.
Symbol supplies about 90% of the portable bar-code scanner market, according to a recent report by Prudential-Bache Securities.
Bar codes contain price and product data that can be read by computers to identify supermarket items, clothing and a growing number of other products. They typically are used to keep track of inventory and determine prices.
Symbol’s purchase of MSI Data “is a very sensible acquisition, and the price is right,” said James D. Dougherty, an analyst with County Securities USA, a subsidiary of New York-based National Westminister Bank.
A Symbol-MSI combination would provide MSI with access to the New York firm’s laser-scanning technology and inroads into markets, such as department stores, where Symbol is especially strong, said Charles Strauch, MSI’s president and chief executive.
Symbol would benefit from MSI’s overseas marketing strength, where MSI recorded 45% of its $90 million in sales for the year ended March 26, 1988. MSI will also get Symbol into the computer market without having to make heavy investments, Strauch said.
Under the agreement, MSI would become a subsidiary of Symbol. Strauch said Symbol officials have indicated a desire to retain MSI management.
MSI, which pioneered the hand-held terminal market in 1967, employs about 800 people. MSI officials said they anticipate no reduction in employment as a result of the Symbol deal.