Altos Computer Systems, once one of a promising group of mid-sized computer makers, said Thursday that it is considering being acquired by Acer Group, a Taiwanese electronics manufacturer, in a deal valued at between $90 million and $100 million in cash.
Altos said Acer has proposed paying $8.35 for each of the San Jose company's 10.8 million outstanding common shares, plus additional options. Altos President Ronald Conway said that while several undisclosed terms of the deal remain unsettled, he hoped to close the sale by the end of July.
If completed, the deal would become the one of the largest in the recent spate of Taiwanese acquisitions of U.S. electronics companies. Earlier this year, a group of Taiwanese investors, backed by their government, purchased personal computer maker Wyse Technology for about $262 million, a deal that was the first Taiwanese purchase of a publicly traded U.S. company.
Analysts say foreign investors, particularly the Taiwanese, are far more interested in the distribution channels and customer relationships of U.S. electronics companies than in their technology.
The $8.35 price Acer has tentatively agreed to pay represents a substantial premium over Altos' $5 to $7 trading range during the last 18 months. Analysts said the price underscores the value Acer has placed on Altos' distribution system for its computers and the service network it has in place for its 128,000 installed systems throughout the world.
Founded in 1977, Altos was one of several companies that quickly embraced a then-new computer operating system known as Unix. With its networks of terminals operating from power supplied by a central mid-sized computer, the Altos system appealed to a variety of small- and mid-sized businesses
However, in recent years, the market for such machines has attracted a wide variety of new suppliers, including some of the largest names in the business, such as Compaq and Sun Microsystems. As a result, Altos' market share has steadily declined and the company suffered a $5-million loss, its first ever, in the fiscal year ended June, 1989.
Analysts praised Conway's moves to sell the company now, while it still has its distribution network and customer base and can attract a strong price. They said if the company had waited too long to find a partner, it might not have been able to command such a great price.