A U.S. appeals court on Wednesday upheld a lower court order blocking MAI Basic Four’s $1.3-billion hostile takeover bid for Prime Computer, but MAI said it intends to turn over information that will allow its tender offer to proceed.
The U.S. Circuit Court of Appeals in Boston ordered MAI, a Tustin business computer manufacturer, to make specific disclosures about trading in Prime shares by Drexel Burnham Lambert, MAI’s financial adviser.
MAI also must provide information about Drexel’s financial condition and its officers and directors, according to the appellate court.
The appeals court affirmed an earlier ruling by U.S. District Judge A. David Mazzone in Boston that Drexel’s involvement in the tender offer makes Drexel a “bidder” under securities laws. That finding means that MAI is required to furnish much more information about Drexel’s finances.
MAI launched its unsolicited tender offer for Prime on Nov. 15. Prime, a Natick, Mass., minicomputer maker, is more than three times the size of MAI in terms of revenue. MAI’s bid has been stalled in court.
Prime has claimed that MAI has not fully disclosed its relationship to the Wall Street investment firm.
Drexel, which agreed to plead guilty last year to criminal charges involving securities trading, is arranging financing for the $20-a-share tender offer for Prime common stock.
Anthony L. Craig, Prime’s president, said he was “gratified” by the appeals court ruling. “We continue to be baffled as to Drexel’s unwillingness to make this straightforward disclosure first ordered by Judge Mazzone nearly 4 months ago,” Craig said.
MAI President William Patton said that MAI does not view the appeals panel ruling as a setback.
“The court has specified what has to be accomplished in its directions to the trial court,” Patton said. “That’s what we were looking for. . . . It’s totally and unequivocally full-speed ahead.”
Patton said MAI expects to provide the requested information within the next week. He said the appeals court decision indicates that once the information is provided, the trial court’s order blocking MAI’s tender offer should be vacated.
“The appellate court has clearly defined what should be provided,” Patton said. “We’re perfectly willing to abide by it and be part of it.”
He said MAI plans to continue a separate proxy battle for control of Prime. The outcome of that fight will be determined at a meeting of Prime shareholders scheduled for May 12.
“Whatever forum Prime management decides they’d prefer--tender offer or proxy--we have to abide by their wishes,” he said.