Move Hints at New Takeover Bid for Prime
A New York investment firm suspended its trading Wednesday in the stock of Prime Computer, fueling rumors that another suitor has emerged for the embattled technology firm.
Prime’s spokesman confirmed that the company’s stock had been placed on a “restricted list” by Oppenheimer & Co., leading to Wall Street speculation that the investment firm may have found a bidder for Prime.
The Natick, Mass., mini-computer maker has been battling a $1-billion takeover bid launched six months ago by rival MAI Basic Four of Tustin. Prime has acknowledged that it has discussed with other firms the possibility of a sale or merger.
Cannot Buy or Sell
Prime stock jumped $1 per share in heavy trading Wednesday, closing at $16.375 on volume of 926,800 shares. The firm’s average daily trading volume is about 500,000 shares.
“We have no information as to why our stock activity was what it was,” said Joe Gavaghan, a Prime spokesman. “We have talked to Oppenheimer and confirmed that we are indeed on their restricted list, but they would not tell us why. We did ask the question.”
When a stock is restricted by a brokerage house, the firm cannot buy or sell the shares for employees or clients. Although there are a number of circumstances under which a stock may be restricted, investment firms frequently suspend trading of a stock when they enter into merger or acquisition discussions involving that company.
Smith Barney, Harris Upham & Co. and First Boston Corp. have been advising Prime during the often acrimonious takeover battle, Gavaghan said. Oppenheimer has no official relation to Prime, he said.
Oppenheimer officials declined to comment on the restriction.
“We would not comment even if we did put a stock on the restricted list as a matter of policy,” said John Ryan, Oppenheimer’s director of public relations.
Bruce Jenkins, vice president of Daratech Inc., a Cambridge, Mass., consulting firm, said he has been told that Prime’s second-largest shareholder, Trinity Investment Management, is interested in acquiring the entire company.
Jenkins said that Trinity, an institutional investor also based in Cambridge, is rumored to be considering a bid of $16.25 in cash, plus $4 in securities, for a total value of $20.25 per share. MAI’s all-cash offer amounted to $20 per share.
Refused to Sign Pledge
As of March 31, Trinity owned 2.6 million Prime shares, or about 5% of the total outstanding, according to Securities and Exchange Commission documents.
Officials at Trinity could not be reached for comment. Paula Levis, a Prime spokeswoman, refused to comment on Trinity’s supposed interest in an acquisition.
“There are a lot of companies we’ve spoken with, and several firms have signed confidentiality agreements, but we cannot comment,” Levis said.
Last week, MAI refused to sign a pledge to keep its hostile takeover bid for Prime at a minimum of $20 per share, fueling Wall Street suspicions that the computer maker may lower or drop its $1-billion offer.
“I can reiterate that MAI is evaluating all aspects of its offer,” said Peter Rosenthal, an MAI spokesman.
