Archive, Cipher Data Fail in Bid for Standstill Pact

Negotiations between Cipher Data Products and Archive Corp. concerning a possible confidentiality and standstill agreement have been terminated, the companies said Tuesday. No agreement was reached.

Costa Mesa-based Archive, which owns a 4.6% stake in San Diego-based Cipher Data, launched a hostile, $7.50-per-share tender offer for the Cipher Data shares it does not own on Dec. 19. Cipher Data’s board rejected the offer as inadequate last Friday, and said it had retained First Boston Corp. to solicit higher bids.

Then on Monday, the rival computer tape-drive companies said they would try to hammer out a confidentiality and standstill agreement as a precondition to discussions of a possible sweetened $8-per-share bid by Archive. Those agreements are used by companies to exchange non-public information under the proviso that neither party will take unfair advantage of the information, including the purchase of shares under certain circumstances.

Cipher Data executives were not available to comment on why the talks broke down. Archive said in a statement that the reason was that it would not agree to Cipher Data’s demand that it not accept shares pursuant to its tender offer for a 90-day period while Cipher looked for other bids.

In a statement Tuesday, Archive Chairman D. Howard Lewis said that his company was still willing to negotiate a friendly acquisition of Cipher Data at a price of $8 a share but that it would not formally change the terms of its tender offer without information from Cipher that “would support a price higher than $7.50 a share.”

Archive Vice President of Finance, B. J. Rone, who described Cipher Data’s demand as “unusual and surprising,” said Cipher Data shareholders have begun to tender their shares but that he did know the total. Archive’s tender offer expires Jan. 22.