A hostile takeover battle involving the two biggest players in the hand-held data entry market ended early Monday as Telxon Corp. dropped its $123-million bid for MSI Data Corp.
Each company also agreed to drop costly expensive legal actions they had filed against each other in a settlement that will cost Telxon $5 million in cash.
The complex agreement clears the way for Symbol Technologies Inc. of Bohemia, N.Y., to acquire MSI through its previously announced $23-per-share tender offer, which values the Costa Mesa technology firm at $142 million. MSI actively sought rescue from the Telxon bid and has accepted Symbol’s offer.
Several analysts called the settlement a clear sign that Telxon had lost the battle of the suits--in which MSI had accused Telxon of patent infringement and Telxon had accused MSI of bribing a former employee to obtain Telxon customer information.
Akron-based Telxon is the nation’s leading manufacturer of hand-held devices for entering inventory data. MSI is the second-largest manufacturer and held the lead over Telxon until 1984.
Between them, the two control almost all of the domestic market for such devices, which are used to scan bar codes that contain price and product information and are used in a growing number of retail and wholesale applications. Symbol Technologies supplies both firms but does not compete in their market.
Telxon announced Monday that it has terminated its tender offer for MSI stock. The complex agreement also calls for Telxon to pay Symbol--soon-to-be MSI’s parent company--the $5-million cash settlement. Additionally, Telxon has agreed to purchase at least $40 million in products from the combined Symbol-MSI over the next five years and to license certain patents from Symbol and MSI at above-market royalty rates of as much as 10% of sales.
Telxon President Raymond D. Meyo said Monday that the settlement was “the best course of action” because it guarantees his company access to important new technologies being developed by Symbol and MSI.
He said the settlement was not an admission by Telxon that it infringed on MSI’s patent.
Jerome Swartz, chairman and chief executive of Symbol, said the settlement allows Symbol-MSI to maintain Telxon as a major customer and guarantees Telxon a supply of product from Symbol and MSI.