Ingram Takes Offer for Micro D Directly to Stockholders

Ignoring an earlier rebuff by the board of directors of Micro D Inc., Ingram Industries Inc. of Nashville, Tenn., launched a $37-million tender offer Monday for the 41% of the Santa Ana computer products distributor that it doesn’t already own.

Meanwhile, the price of Micro D’s stock jumped 50 cents a share Monday to $13.75, well above Ingram Industries’ offer of $12.50 per share, on speculation that competing offers for the nation’s largest wholesaler of computer products will develop.

In fact, Microamerica Inc. of Marlborough, Mass., has made inquiries about purchasing all of Micro D’s stock for $15 a share, according to Securities and Exchange Commission documents filed by Ingram on Friday.

But Ingram Industries already controls 59% of Micro D’s stock. And President E. Bronson Ingram said his firm’s interest in the Orange County company “is not for sale” to a third party.

Micro D has been trading above $12.50 a share ever since Ingram Industries proposed in December to acquire all of the company’s stock for that amount. The original offer was rejected as inadequate by a committee composed of Micro D’s three outside board members.

In bringing the takeover bid directly to shareholders, Ingram said his company did not increase the $12.50 because a review of Micro D’s financial data indicated that a higher offer was not warranted.

In a letter sent to Micro D’s board last week, Ingram criticized the company for obtaining market share at the expense of profit margins and concluded that Micro D “is unlikely to achieve projected 1989 sales growth.”

“We’ve made what we consider is a full and fair price, and we intend to abide by that price,” Ingram said Monday. “We’ll buy those shares if someone agrees with us. If they don’t, obviously they’ll continue to hold their shares.”

By seeking to acquire all of Micro D’s outstanding shares, Ingram Industries hopes to eventually merge Micro D’s operations with its own smaller computer products distribution subsidiary, Ingram Computer of Buffalo, N.Y.

Although Ingram Industries has had a controlling interest in Micro D since 1986, the firm only holds three of Micro D’s seven board seats. Micro D insiders own about 7% of the company’s stock, with the rest owned by public investors.

In earlier documents filed with the SEC, Ingram Industries said it had recently tried to interest Micro D’s management in buying Ingram Computer. But since talks failed to result in an acquisition, Ingram opted to pursue a merger of the two companies, the filing stated.

“As we continue to expand, we are creating overlapping distribution with Micro D. There is very little overlap at this point, but there will be more, and we would like to avoid the problems that this would bring,” Ingram said.

Micro D shareholders have until Feb. 3 to respond to the tender offer.

Micro D Chairman Linwood A. (Chip) Lacy said that the company could not comment on the offer until it files its response with the SEC. A company press release, however, said the offer is under consideration by Micro D’s board of directors.

At the time of the initial merger talks in December, Lacy said he favored combining the two companies at a fair price.

Micro D sales are expected to top $525 million in 1988, or about 15% of the $3.7-billion personal computer products distribution market.

Besides its computer products business, Ingram owns marine transportation, oil and gas exploration, and insurance companies.

Forbes magazine recently estimated Ingram Industries’ annual sales at more than $1 billion, a figure that Ingram said was “within the realm of reason.”