Computer Firms in Bitter Takeover Fight : MAI Calls Prime Chairman an Inside Trader
MAI Basic Four, a Tustin computer maker, charged Wednesday that Prime Computer had misled federal regulators about its takeover defenses and accused Prime Chairman David J. Dunn of trading stock on inside information.
The accusations were the latest salvo in MAI’s $970-million hostile tender offer for Natick, Mass.-based Prime, a major manufacturer of minicomputers. MAI, which is controlled by New York investor Bennett S. LeBow, launched its $20-a-share bid for Prime three weeks ago.
In an amendment to an ongoing lawsuit MAI filed in federal court in Massachusetts, MAI alleges that Dunn and his investment partnership, Idanta Partners of Ft. Worth, bought 64,700 shares of Prime stock after LeBow met privately on Sept. 19 with Prime’s former chief executive, Joe M. Henson, to discuss the possibility of a business combination between MAI and Prime.
Documents that Prime has filed with the Securities and Exchange Commission show that Dunn and Idanta purchased 64,700 Prime shares on Nov. 7 and Nov. 8 at prices ranging between $14.81 and $15.06 a share, an overall cost of nearly $1 million.
In New York Stock Exchange trading Wednesday, Prime closed at $17.50 a share, down 12.5 cents.
MAI’s complaint alleges that Dunn bought the Prime stock after he had knowledge of LeBow’s intentions to pursue a business combination with Prime but before that interest had been publicly disclosed.
It alleges that Dunn’s stock purchase occurred “while the market was still trading on the misleading statement attributed to a Prime spokesman” that there was no threat of a takeover attempt.
MAI also said Prime’s employee retention and severance agreements and its employee protection, stock appreciation rights and stock option plans were all designed or revised to “impose crippling costs” on anyone attempting to buy Prime. The company also alleged that these plans were not properly disclosed to the SEC.
Joe Gavaghan, a Prime spokesman, said late Wednesday that the company had not seen a copy of the MAI suit and it would be “inappropriate” to comment.
Dunn, who has a residence in La Jolla, could not be reached for comment.
MAI also said its tender offer would be extended until Dec. 21. The offer, made Nov. 15, had been scheduled to expire next Tuesday.
MAI said the extension was intended to give a Delaware Chancery Court time to rule on the lawsuit challenging Prime’s takeover defenses. A hearing on the suit is scheduled Friday.
