MAI Ends Bid for Prime Unit but LeBow Doesn’t

MAI Basic Four on Thursday scrapped its $525-million cash offer to buy Prime Computer’s minicomputer business, a proposal that has appeared doomed since Prime agreed last week to sell the whole company to a New York venture capital firm.

But New York investor Bennett S. LeBow, MAI’s controlling shareholder, will continue to pursue a purchase of the Prime unit by waging a proxy fight through an MAI affiliate, Brooke Partners. LeBow is seeking to oust Prime’s directors by proposing an alternative slate of directors at the Natick, Mass., firm’s Aug. 24 annual meeting.

LeBow’s candidates have committed to selling Prime’s minicomputer business to MAI, a Tustin computer maker.

On Aug. 4, Prime accepted an offer of $1.2 billion from J. H. Whitney & Co. The New York firm originally offered $1.4 billion for the company but reduced its bid after Prime reported a loss of nearly $19 million for its latest quarter.

MAI had been pursuing a purchase of all or part of Prime for nearly nine months. Most recently, the Tustin firm had sought to buy just the minicomputer unit, which represents about one-third of Prime’s revenue, for $525 million.

Fred D. Anderson, MAI’s chief financial officer, conceded that the proxy fight for the minicomputer division is a long shot. But, he said: “There is still a possibility the Whitney deal could fall through.”

MAI allowed its hostile tender offer for all of Prime to expire late last month. The offer for the minicomputer unit expired Wednesday.