Helionetics Announces Intent to Buy Definicon : Acquisition: Irvine manufacturer of power conversion systems offers $12.5 million in stock for maker of computer enhancement products.
Helionetics Inc. announced Monday that it had signed a letter of intent to acquire Definicon International Corp. of Newbury Park for about $12.5 million in stock.
Charles W. Jobbins, Helionetics chairman and chief executive, said the merged companies will be called Helionetics International, and Vincent P. Williams, currently chief executive of Definicon, will be the new company’s president and chief executive.
Definicon, a privately held manufacturer of personal computer enhancement products, agreed to the deal following the failure of its initial public offering last month, a spokesman said. The company, founded in 1982, had sales of about $12.5 million last year and expects in 1990 to have sales of $25 million to $30 million and profits of $2.5 million from its own operations.
Helionetics, a manufacturer of power conversion systems for the military, has a checkered history that includes numerous lawsuits and a bankruptcy filing. The company, controlled by controversial Beverly Hills financier Bernard B. Katz, attracted national attention in the early 1980s with a prestigious slate of directors and a highly touted laser technology, but slipped into bankruptcy in 1986. It emerged from Chapter 11 bankruptcy early last year after a bitter fight over the reorganization plan.
In 1989, Helionetics had revenue of $10.1 million and earnings of $269,000, not including extraordinary items.
Helionetics and Definicon will consolidate their operations in Irvine, and Jobbins said he expects that the business will grow fast enough to avoid layoffs. Definicon has about 50 employees and Helionetics has about 130. Jobbins declined to give a revenue projection for the combined companies.
Already, Definicon’s Placentia-based Truetest division, which makes video adapter boards for personal computers, is being transferred to the Helionetics facility in Irvine.
Jobbins said that the deal was still subject to a shareholder vote and a fairness opinion from an outside investment bank but that he expected those formalities to be completed within 45 days. He said the combination made sense because Helionetics has been trying to increase sales of power supply systems for personal computers and Definicon’s technological and marketing strengths in the PC area would help in that effort. Helionetics can help Definicon gain entry into military markets, Jobbins added.
Definicon, which has an unusual presence in the Brazilian personal computer market thanks to its relationship with Brazilian investor Franciso Fusco, said the agreement with Helionetics resulted in part from the inability of L.C. Wegard & Co., a Bernardsville, N.J., investment bank, to consummate its “firm commitment” in underwriting Definicon’s initial public offering.
Definicon’s offering went into effect Jan. 23, but the stock was not sold, and the company agreed to sell itself to Helionetics instead.
