A San Diego investment group launched an unsolicited tender offer Friday to acquire Diceon Electronics Inc., a financially troubled manufacturer of computer products, for $27.2 million.
Calvary Partners said it has offered $5.25 cash for each of Diceon’s 5.1 million common shares outstanding that it doesn’t already own. Calvary, which owns about 2% of Diceon’s shares, said it will also try to seek control of the Irvine firm’s board of directors by waging a proxy battle at Diceon’s annual meeting Jan. 16.
Diceon’s stock jumped 47.6% to close Friday at $3.875 per share, up $1.25, in over-the-counter trading. The closing price was well short of the Calvary offer.
“We intend to proceed in a legal fashion to acquire Diceon Electronics,” said James Arabia, president and general partner of Calvary Partners, which made the offer through its subsidiary Calvary Holdings. “That would include a proxy contest.”
Peter S. Jonas, Diceon’s vice chairman, said the company had received an “unsolicited, unfinanced and conditional offer” from Calvary. He said Diceon’s directors will meet Monday to discuss the offer. He declined to comment further.
Calvary said in a statement that it is prepared to nominate its own candidates to replace Diceon’s four-member board. The San Diego firm said it will seek to amend Diceon’s corporate bylaws at the annual meeting to put all four board seats up for a vote. At present, only one board member is up for reelection.
Calvary declined to disclose any plans it has for Diceon, a manufacturer of printed circuit boards and other computer components.
Diceon lost $10.2 million on revenue of $125.5 million for its fiscal year ended Sept. 30. Facing fierce competition in the circuit board industry, the company laid off 225 of its 1,500 employees as part of a manufacturing restructuring in September. The restructuring resulted in a one-time charge against 1990 earnings of $5 million.
Diceon’s financial problems make it a vulnerable target for an unfriendly takeover, said Jeff Kilpatrick, president of Newport Securities in Costa Mesa. But Kilpatrick said Diceon management may consider Calvary’s offer too low.
“I doubt the current management of the company would want to part with it for a price that is well below book value,” he said. Diceon has a book value--the theoretical value of its assets if all debts were paid in full--of about $7.47 a share.
Arabia said Calvary has received no response from Diceon since it sent the offer to the company Nov. 21. The original offer expired last Sunday. Arabia said the offer is subject to approval by Diceon’s board of directors.
Management holds about 35% of Diceon stock and institutional investors own about 40%, with the remainder owned by individual investors.
Calvary said it has hired Georgeson & Co., a New York proxy-solicitation service, to assist with the tender offer. Arabia declined to name Calvary’s nominees for the board or to say how his company would finance the acquisition.