Alpha Microsystems Gets Takeover Offer : Bid: Business-computer maker calls holding company’s proposed buyout for $10 million plus stock ‘inadequate.’
A small New York industrial holding company has made an unsolicited offer to buy business-computer maker Alpha Microsystems Inc. for $10 million in cash plus stock, the company announced Thursday.
The Aril Group Inc., a publicly held company that recently acquired a kitchen-cabinet manufacturer, hopes to acquire Alpha Microsystems as part of a plan to expand into the computer industry, said Alfred Schoenberg, Aril’s president. The company had asked Alpha Microsystems to respond to its offer by the end of the day Thursday.
The offer sent Alpha Micro’s stock soaring 66% to close Thursday at $2.50 per share, up $1. It was the biggest percentage gainer in over-the-counter trading.
David Young, Alpha Microsystems’ chief financial officer, said the Santa Ana firm believes that the Aril offer is “inadequate.” He said the company has not been able to determine the ability of Aril or its financial adviser, Ventana International Ltd., to finance the deal and is continuing “to evaluate this confidential offer.”
Aril Group has held talks about a possible acquisition with Alpha Microsystems officials for several months, Schoenberg said. He said his firm has received a letter of credit from Ventana for financing for the deal.
It is not the first time Alpha Microsystems has been the subject of takeover interest. In 1988, General Automation, an Anaheim computer company, attempted to acquire the firm but broke off talks after deciding to merge instead with a British electronics firm. Other firms have also courted Alpha Micro, but the deals never panned out.
In addition to the $10 million cash, the Aril Group offered 2.1 million shares of its stock to Alpha Microsystems shareholders. Under terms of the offer, each share of Alpha Microsystems stock would be converted to $3.25 cash plus 0.75 share of Aril stock. The stock transaction would take place after a pending 1-for-5 reverse split of Aril’s stock in which five shares will be converted to one share.
Aril did not estimate the value of the stock portion of its offer.
The Aril Group, formerly Marcom Telecommunications, divested its telecommunications operations last year for a net gain after discontinuation costs of $945,906. The Aril Group was formed in January when it was spun off from Corporate Data Sciences Inc., a paper manufacturing and packaging company that retains a majority stake in Aril.
In August, Aril acquired Corporate Data Sciences’ Medallion Kitchens subsidiary in Waconia, Minn., a kitchen-cabinet manufacturer with 300 employees and $26 million in sales for its year ended Feb. 28.
Schoenberg said Aril isn’t planning a tender offer because its offer is equivalent to a 235% premium on the Alpha Microsystems’ previous stock price of $1.50 a share.
The two companies are exchanging confidential business information, Schoenberg said.
Aril said in a statement that it will consider an alternative course of action if no response or a negative response is received.
Alpha Microsystems makes a line of business-computer systems based on a proprietary operating system. Hurt by competition within the struggling minicomputer industry, the company has launched a cost-cutting plan that included laying off 35 employees in August. Richard Wilcox, a co-founder of Alpha Microsystems, resigned his posts as chief technology officer and vice chairman earlier this month.
Alpha Micro reported a second-quarter loss of $1.1 million on sales of $13.5 million, contrasted with earnings of $113,000 on sales of $13.1 million a year earlier.
