Letter Draws Strong Reply : Prime Still Standing Fast Against Takeover by MAI
Bennett S. LeBow, chairman of MAI Basic Four Inc. in Tustin, thought maybe a letter would persuade Prime Computer Inc. to finally surrender in the escalating takeover battle that started in November.
He was wrong.
On Tuesday, Prime Chairman David Dunn issued a letter of his own, stating that his company is still opposed to MAI’s hostile tender offer to acquire Prime for $970 million. Prime is a Natick, Mass., minicomputer manufacturer.
“Although your rhetoric has increased, we note that your position remains unchanged,” Dunn said in answer to LeBow’s letter. “Your $20-per-share offer continues to be financially inadequate.”
Holders of about 71% of Prime’s outstanding stock have already tendered their shares to MAI, but Prime’s management has continued to oppose the acquisition.
Analysts said relations between the two companies have become very tense. “There is some real mudslinging going on here,” said Robert Johnson, technology analyst with the Houston brokerage of Rotan Mosle.
Prime on Tuesday also released its fourth-quarter results, which showed that its campaign to fend off MAI has been costly. The company lost $14.4 million on revenue of $45 million for the quarter.
For 1988, Prime earned $19 million, compared to $64.8 million in 1987. Revenue was $1.6 billion in 1988, compared to $961 million in 1987.
Spokesman Richard Eckel said Prime has spent about $10 million paying lawyers and consultants. “This is a costly process both in time and money,” said Eckel.
Several analysts said the merger will eventually happen. “It looks inevitable now,” Johnson said. If it does, the deal will be one of the largest computer industry mergers on record.