Prime Gains Time in MAI’s Takeover Bid

Prime Computer gained breathing room Tuesday in its effort to stave off an unfriendly takeover by MAI Basic Four when a Delaware court denied a motion to force Prime to hold its annual shareholders meeting today. In a separate development, Prime disclosed in a court document that “prospects for a better bid” than Tustin-based MAI’s latest $1.1-billion offer “are in fact substantial.”

Prime, a minicomputer maker based in Natick, Mass., said in a filing in Delaware Chancery Court that it is discussing a possible acquisition of Prime with “several Fortune 500-sized companies and two well-established leveraged-buyout firms.”

Prime had previously disclosed that it was talking with third parties, but before the filing in Delaware had not described the parties in detail.

Rescheduled to July 26

MAI had asked the Delaware court to force Prime to hold its annual meeting today, as previously scheduled, but Prime rescheduled it to July 26. Prime said it needed more time to study a new bid announced by MAI on June 1.

MAI contended that the delay violated a Delaware law requiring Prime to hold its meeting within 13 months of the previous one. MAI also accused Prime of intentionally delaying the meeting to make it harder for MAI to obtain financing for the deal.

But the court’s vice chancellor, Maurice A. Hartnett, ruled that Prime’s directors “acted in the best interests of the stockholders of Prime in delaying the annual meeting for a reasonable time in order to permit the stockholders to evaluate the new and much less attractive offer of (MAI) and in order to give the directors reasonable time to find alternatives” to the MAI offer.

On June 1, MAI lowered its bid for Prime to an offer it valued at $19.50 per share in cash and securities, or about $1.1 billion. MAI’s original offer for Prime, made in November, was for $1.3 billion in cash, or $20 per share.