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MAI, Prime Computer to Reopen Talks

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Times Staff Writer

Prime Computer said Tuesday that it will meet with MAI Chairman Bennett S. LeBow for the first time since MAI launched a hostile bid for Prime nearly seven months ago.

Prime, a Natick, Mass., minicomputer maker, also said that, in light of a recently revised offer by MAI, it has rescheduled its annual meeting from June 14 to July 26.

Analysts said the moves are probably a sign that Prime has been unable to come up with a “white knight” bidder or another plan for escaping MAI’s offer. The postponement of the annual meeting, at which time MAI had planned a proxy fight to try to replace Prime’s board, will buy the company more time to find an alternative to MAI’s offer, analysts said.

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“I can’t make out whether Prime is truly looking to negotiate with MAI . . . or if this is another step in this very complicated defense that Prime has undertaken,” said Charles Foundyller, president of Daratech Inc., a Cambridge, Mass., consulting firm.

Prime said its three-member executive committee will meet with LeBow at an unspecified date to discuss MAI’s latest offer. The meeting was requested by LeBow, Prime said.

MAI, a Tustin computer maker, launched a bid of $1.3 billion, or $20 per share, for Prime in November. The takeover bid has been stalled much of the time since by various legal challenges thrown up by Prime.

After Prime challenged MAI to show that it could obtain financing for the deal, MAI lowered its bid last week to a combination of cash and securities. MAI values the new bid at $19.50 per share, although several analysts have estimated the value at about $17 to $18.

Although Prime said it will meet with MAI representatives, the company said in a statement that the new MAI proposal “does not appear to reflect the intrinsic value of the company today or the value that the directors believe may be available in a sale or recapitalization.”

On Monday, Prime said it is considering a financial overhaul of the company and making a cash payment to shareholders as an alternative to MAI’s offer.

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Prime Chairman David J. Dunn said the company “continue(s) to believe that Prime’s board of directors, rather than MAI, which appears committed to its own agenda, is in the best position to maximize value for all of our shareholders.”

Separately, MAI said Prime has agreed to withdraw its appeal to a federal court in Boston in which Prime sought to block MAI’s offer. Prime had claimed that MAI’s financing for the deal would violate Federal Reserve Board margin requirements that limit the amount of stock that can be used as collateral for a hostile bid. Also Tuesday, Prime said it will close a manufacturing plant in Manchester, N.H., as part of a corporate reorganization related to its 1988 merger with Computervision Corp., a Bedford, Mass., computer firm. The plant will be closed by the end of 1989, resulting in the laying off of 240 workers, Prime said.

Although Prime previously has blamed expenses incurred fighting the MAI bid for reduced earnings, a Prime spokeswoman said the closing is not related to the takeover.

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