Fujitsu to Acquire Remaining 58% Stake in Amdahl
Japan’s Fujitsu Ltd., the world’s fourth-largest computer company, on Wednesday said it will buy the 58% of Amdahl Corp. it doesn’t already own for $850 million to tap Amdahl’s growing U.S. and European business in computer services.
Fujitsu made its first investment in the Sunnyvale-based maker of mainframe computers in 1972, two years after it was founded.
The offer of $12 per share was barely above Tuesday’s closing price of $11.81 and far below what was recently paid to other companies that help customers set up and maintain networks. Amdahl added services and software after mainframe sales plummeted in 1992.
“I feel like I’ve had my pocket picked,” said Alan Jacobs, director of research at Avalon Research. “When it looked like the company was on the brink of doing a lot better, it’s going to be Fujitsu that ends up making the real money.”
Amdahl, which made its name by selling clones of International Business Machines Corp. mainframes, has seen revenue fall 35% from a record $2.52 billion in 1992 to $1.63 billion last year. The company has reported six consecutive quarterly losses.
Fujitsu said the move puts the Japanese company’s marketing and financial muscle behind Amdahl’s services, one of the fastest-growing segments of the computer industry. It will also expand Fujitsu’s presence in the U.S. and Europe, the company said.
“This acquisition represents a strong affirmation by Fujitsu of its commitment to the enterprise server and storage business and to Amdahl’s extensive customer base,” said Tadashi Sekizawa, president of Fujitsu.
A server is a powerful computer that manages and distributes information on a network.
Revenue from Amdahl’s service and software business is expected to reach 60% of total sales, up from about 50% in 1996, the company said. Amdahl has added computer services and selling servers to its business in the last three years.
Trading in Amdahl shares was halted Wednesday morning, pending the announcement. After resuming trading, Amdahl shares rose 6 cents to close at $11.88 on the American Stock Exchange.
On a conference call with analysts and investors, Amdahl Chairman and Chief Executive John Lewis was asked repeatedly why Amdahl agreed to sell the rest of the company now, just as some said it was beginning to turn a corner, said Michael Geran, an analyst with the Pershing Division of Donaldson, Lufkin & Jenrette Securities Corp.
“Five times that question was asked, and five times that answer was finessed,” Geran said.
Fujitsu said Amdahl will keep its name and management and operate as a wholly owned subsidiary. No job cuts are planned, it said.
Fujitsu’s American depository receipts fell 50 cents to close at $73.50.
