Micro D Rejects Shareholder’s $37-Million Buyout Offer
Santa Ana-based Micro D on Tuesday rejected a $37-million buyout offer from its majority shareholder, Ingram Industries Inc. of Nashville, Tenn.
Micro D, the nation’s largest wholesaler of personal computer products, said a three-member committee considered the Ingram offer and determined that the $12.50-a-share bid is insufficient. The panel is composed of Micro D’s three outside directors.
In a prepared statement, committee member William Lomicka said the panel “expects further dialogue with Ingram in the near future.”
Ingram, a conglomerate that owns nearly 60% of Micro D’s stock, offered last week to buy the rest of the company.
Ingram officials could not be reached for comment late Tuesday.
In an interview earlier this week, Ingram Chairman E. Bronson Ingram said his company is interested in a “negotiated transaction” but will consider other options.
“We really haven’t tried to determine what we’d do in the event (the offer) failed,” Ingram said. “We’d like to do it aboveboard and friendly. We’re going to try very hard to do that.”
Securities analysts have said they expect a higher offer for Micro D from Ingram or another party.
Linwood A. Lacy Jr., chairman of Micro D, has said he favors a merger of the companies, but only if the price paid by Ingram is fair to all shareholders.
Ingram has said it plans to merge its Buffalo, N.Y.-based personal computer distribution subsidiary, Ingram Computer, with Micro D. The Ingram unit is a smaller competitor of fast-growing Micro D, which expects to top $500 million in sales this year.
Ingram has been trying to expand its Ingram Computer operation and hopes to save money by merging the unit with Micro D, according to E. Bronson Ingram.
“We were opening distribution facilities that were in close proximity to Micro D’s, and that didn’t seem economically to make much sense,” Ingram said. “We finally determined that if we were ever going to do something, the time had come to do it.”
Despite owning a controlling interest in the firm since 1986, Ingram representatives hold only three of Micro D’s seven board seats. “We are operators, not investors,” Ingram said. “We would prefer to be in control of the companies we own.”
Ingram also expressed some dissatisfaction with Micro D’s financial performance. Micro D management “has done a good job,” he said, “but a great deal of their growth has come at the expense of (profit) margins. . . . They’ve been very successful at gaining a dominant market position and less successful with their earnings.”
Micro D estimates that its share of the $3.7-billion personal computer distribution market has risen to 15%, up from 8% 3 years ago.
Ingram, one of the nation’s largest privately held firms, owns companies that conduct marine transportation, oil and gas exploration, and insurance activities. It is also a distributor of books, magazines, videotapes and personal computer products.
