P. M. BRIEFING : Prime Agrees to Whitney Merger

Prime Computer Inc., besieged for eight months by hostile suitor MAI Basic Four Inc., turned today to a friendly buyer, the New York investment firm of J. H. Whitney & Co., in a deal valued at over $1 billion.

Prime and Whitney said they have agreed to an acquisition in which Whitney would pay $21.50 a share in cash for 79% of the Natick, Mass.-based computer maker’s outstanding common stock. The remaining 21% of Prime’s shares would be exchanged for bonds with a face value of $22 a share.

Securities analysts said that offer appeared to be significantly higher than MAI Basic Four’s last bid, which was $19.50 a share in cash for 75% of Prime’s shares and securities with a face value of $21 a share for the remainder.

However, MAI said this week it was preparing to boost its offer, raising the prospect of a bidding war.

“Is it too late for (MAI) to top this one? Presumably not. You’re in an auction mode,” said John W. Adams, who follows Prime for the Boston investment firm of Adams Harkness & Hill.

Prime had been searching for months for a friendly buyer, or white knight, to top MAI’s offer. It said its board of directors unanimously approved the merger agreement.