MAI’s LeBow Denies Hidden Motive in Prime Takeover Bid
New York investor Bennett S. LeBow, responding Wednesday to Wall Street criticism of MAI Basic Four’s proposed $970-million takeover of Prime Computer, said he has no hidden motive in his bid for the computer manufacturer.
“Contrary to speculation from certain quarters about MAI Basic Four’s intentions, the only motive for (MAI’s) tender offer for Prime shares is to acquire Prime,” LeBow wrote in a letter to Anthony L. Craig, Prime’s president and chief executive.
Since Tustin-based MAI launched its $20-a-share bid on Nov. 15, securities analysts have been skeptical of LeBow’s intentions. Analysts have speculated that MAI may have difficulty raising financing for the deal and that LeBow--a takeover specialist who is orchestrating the deal as MAI’s majority shareholder--may be trying to entice Prime into making a counteroffer for MAI.
Investors’ skepticism has resulted in Prime’s stock trading at a substantial discount to MAI’s $20 bid.
Closed Unchanged
In New York Stock Exchange trading, Prime closed unchanged Wednesday at $16 a share. Prime’s stock has fallen from a high of $18 on the day MAI launched its offer. MAI stock, also traded on the Big Board, on Wednesday fell 62.50 cents a share to $8.25.
The LeBow letter said a merger of MAI and Prime “will produce a powerful competitor in the rapidly maturing computer industry. . . .”
“We firmly believe the combined companies will be far more successful than either of us can be alone, and a prompt consummation of our acquisition will best serve the interests of our respective stockholders, employees, customers and suppliers,” the letter said.
A spokesman at Prime’s Natick, Mass., headquarters said the company received the letter but would have no immediate response.
Some analysts have said that a combination of the two computer makers doesn’t seem to make good business sense. They argue that the two companies’ computers and the markets they serve are neither similar enough nor different enough to provide a good strategic fit.
Prime is a manufacturer of minicomputers used by large customers for scientific, engineering and manufacturing purposes. After acquiring Computervision last February, Prime also became a leading player in the computer-aided design and manufacturing, or CAD/CAM, part of the computer industry.
MAI makes computers for small and medium-size businesses in specific industries such as apparel making, health care, hotels and transportation.
Rotan Mosle’s Johnson is one analyst who believes that a merger could provide strategic benefits for both companies.
Analyst Sees Fit
“If there are going to be mergers in the computer industry, I don’t know who could possibly be a better fit for MAI than Prime,” Johnson said. Prime recently began marketing a relatively inexpensive computer system to MAI customers and has been “stealing accounts away from MAI Basic Four,” he said.
“That really tells you something about the synergies between these two companies,” Johnson said.
But Charles Foundyller, president of Deratech Inc., a Cambridge, Mass., computer research firm, sees “very little synergy” between MAI and Prime. The segment of the market in which MAI and Prime have begun to compete, he said, represents “a teeny piece” of Prime’s business.
Prime has asked shareholders not to tender their shares to MAI until the company’s board of directors makes a recommendation on the offer, which is expected by Nov. 29.
MAI has filed lawsuits in Delaware and Massachusetts seeking to block various takeover defenses that Prime might employ. On Tuesday, Prime sued MAI, claiming that the company had failed to make “a full and fair disclosure” of information regarding its offer.
