Prime Computer May Slash Up to 1,000 Jobs
Prime Computer plans a major overhaul that will include as many as 1,000 layoffs as the computer maker tries to stave off a $970-million hostile takeover bid by MAI Basic Four of Tustin.
The planned corporate shake-up, which involves combining the worldwide marketing and sales organization of Prime and its Computervision subsidiary, was announced to Prime employees in general terms in an internal memo earlier this month.
Industry analysts said the move appears to be part of Prime’s effort to fend off MAI, a computer maker controlled by New York investor Bennett S. LeBow. MAI launched its $20-a-share offer for Prime stock on Nov. 15.
Separately on Tuesday, a Delaware Chancery Court judge ruled in favor of Prime by rejecting an attempt by MAI to invalidate Prime’s “poison pill” anti-takeover plans. Prime’s poison pills, including lucrative severance agreements for key executives known as “golden parachutes,” were adopted in an effort to make a takeover prohibitively expensive.
To defeat the LeBow bid, analysts have said that Prime, a Natick, Mass., maker of minicomputers, should move to increase the value of its stock. The planned overhaul could help the stock price by eliminating duplicative jobs and operations, analysts said.
Prime’s stock closed Tuesday at $16.25 a share, down 12.5 cents. Prime’s stock price has lagged below the $20-a-share MAI offer because investors have been skeptical about the seriousness of LeBow’s bid.
The company’s planned reorganization includes eliminating the separate sales and marketing divisions that were created when Prime acquired Computervision in a $435-million hostile takeover in February. Effective Jan. 2, Prime said it is forming a single organization that will be divided into three geographic units: North and South America; Europe, Africa and the Middle East, and the Pacific Rim.
Integrating Computervision into Prime will make selling it off much more difficult, said Charles Foundyller, president of a Cambridge, Mass., consulting firm.
“It will be difficult to unravel Prime from Computervision, and that could put a damper on Drexel Burnham (Lambert investment firm’s) enthusiasm for the deal,” he said.
Prime in May announced plans to cut 700 jobs by Dec. 31 as part of its merger with Computervision. A Prime source said additional layoffs will probably occur sooner as a result of MAI’s takeover attempt.
