Institutes Layoffs, Special Dividend; Sells Unit : Dataproducts Acts to Discourage Suitor
Dataproducts Corp., responding to a hostile suitor, unveiled plans Thursday for a major overhaul that includes eliminating 400 domestic manufacturing jobs, mostly in Woodland Hills.
Dataproducts, a leading independent maker of computer printers, said the plan also calls for a special cash dividend and the sale of a subsidiary. The company also will proceed with the previously announced sale of its 22-acre headquarters property in Woodland Hills to Trizec Properties Inc., a Canadian concern, for $63 million.
Over the next year, Dataproducts will eliminate the 400 jobs by moving most of its U.S. computer-printer manufacturing to its plants in Hong Kong and Ireland. Dataproducts, which currently has 2,000 U.S. workers overall and 3,500 worldwide, said the employment shift and other streamlining steps would save the company $20 million a year.
Dataproducts Chairman Jack C. Davis said more than 300 of the jobs would be eliminated locally, but that he did not yet know how many workers would leave through layoffs or attrition. He said laid-off workers would get severance pay and help with finding new jobs.
The overhaul follows last month’s announcement by a New York investor group, DPC Acquisition Partners, of three offers to buy all or part of Dataproducts. The group, which already owns 8% of the company, offered $15 a share, or about $273 million, in its one proposal to buy the rest of Dataproducts.
The group includes Crescott Inc., a New York holding company whose president is Munawar Hidayatallah. He said DPC was still reviewing Dataproducts’ plan, but that “all three of our offers are still on the table.”
Regardless, Dataproducts’ stock closed sharply lower in heavy trading after the announcement diminished the takeover speculation, analysts said. The stock fell $2.25 a share to $10 in American Stock Exchange composite trading as nearly 1 million shares changed hands.
Davis emphasized that the company would accomplish its plan without going further into debt. “We’re not borrowing money to give to the shareholders,” he said.
The company’s plan also includes:
- The sale of its Dataproducts New England unit, which makes rugged printers and communications products for the military. The unit, based in Wallingford, Conn., accounted for about $50 million of Dataproducts’ $353.4 million in total sales for the fiscal year ended March 25.
Dataproducts did not estimate how much the unit might fetch. But DPC, in one of its three proposals, offered to buy only Dataproducts New England in exchange for $25 million cash and its existing stake in Dataproducts.
- A one-time charge of $45 million against earnings for Dataproducts in its fiscal second quarter ending Sept. 30 to reflect the restructuring’s costs.
- A special cash dividend for Dataproducts stockholders, which is expected to be about $3 a share, or $60 million based on Dataproducts’ nearly 20 million total common shares currently outstanding. Dataproducts said it expects to have about $60 million in after-tax proceeds from the sales of its New England subsidiary and real estate, and after subtracting the restructuring costs.
Dataproducts also will drop its regular, semi-annual dividend of 8 cents a share.
- Dropping the company’s black-and-white, solid-ink printer line to focus on introducing a color version of the printer by next summer.
