MAI’s LeBow May Have Cut Himself Out of Prime Deal

When he cut his buyout offer for Prime Computer Inc. at the eleventh hour, takeover specialist Bennett S. LeBow was driving a hard bargain. Maybe too hard.

On Friday, J.H. Whitney & Co., the nation’s oldest venture capital firm, rode into battle as a “white knight” friendly to Prime’s management in a deal valued at between $1.4 and $1.25 billion.

Would Whitney have jumped in if LeBow hadn’t cut his price?

“I don’t know,” said Don E. Ackerman, a general partner in the New York City firm. “He dropped his offer at about the same time we were coming to grips with a decision, so we never had to think about it.”

Wall Street professionals had fewer doubts.

“By playing cute, LeBow blew it,” one arbitrager said flatly, speaking anonymously.

Whitney announced an agreement with Prime’s board of directors to buy the company for cash and securities.

The value placed on the package by Wall Street analysts was roughly the same price that LeBow had initially offered last November, but at least $120 million more than the revised offer he made June 1.

Peter Rosenthal, a spokesman for MAI Basic Four Inc., the Tustin, Calif., computer firm that LeBow heads, said that LeBow would not comment on the Whitney deal.

Before LeBow cut his $20-per-share offer, Prime had solicited more than 50 companies, including Whitney, for a higher offer. When no one came forward in April or May, it appeared MAI Basic had the deal sewn up.

Then, LeBow dropped his price to $19.50 in cash for about 75 percent of Prime’s shares and a package of bonds and preferred stock for the remainder. Analysts valued that offer at about $18 a share, or $1.13 billion, and Prime immediately postponed its annual meeting from June 14 to July 26 to try again to get a better price.

On Thursday, shortly after Prime indicated it had found a white knight, LeBow announced that he would raise his price. But as of Friday evening, he had not said how much more he would offer.