British Firm to Pay $375 Million for Wonderware

By P.J. HUFFSTUTTER

Feb. 25, 1998 12 AM PT

TIMES STAFF WRITER

IRVINE —

Automation software maker Wonderware Corp., on the rebound from a two-year slump, said Tuesday that it is being bought for $375 million in cash by one of Britain’s largest engineering and electronics firms.

Siebe PLC will pay $24 a share for Irvine-based Wonderware--50% more than Monday’s closing price.

Wall Street embraced the news, pushing the company’s stock up nearly 48%, or $7.63 a share, to $23.63 on the Nasdaq market. More than 3.7 million shares changed hands, compared with the average volume of about 117,000.

The announcement surprised analysts, who said Wonderware had not been looking for a buyer. Noting the company’s strong position in the software manufacturing arena, industry watchers said the merger would allow both companies to expand into new markets.

“Wonderware is a pretty solid company, but Siebe must have really, really wanted them to pay this much,” said Dion Cornett, an analyst who tracks industrial automation with First Analysis.

Cornett noted that Wonderware, which had been trying to offer different solutions for small to medium-sized businesses, would be able to draw on Siebe’s technologies to round out its product lines.

The deal, which has been in the works since late January, is expected to close in early April, officials said. Wonderware will become a wholly owned division of Siebe, merging into the British firm’s control-system group.

Wonderware, which has about 445 employees, including nearly 300 in its Irvine headquarters, does not expect any layoffs, said Roy H. Slavin, chairman and chief executive officer, who expects to stay on after the deal is closed.

Siebe plans to raise the money for the buyout through its existing credit lines, and will begin a cash tender offer as soon as possible, officials said. The deal, which was approved by Wonderware’s board of directors, is subject to regulatory approval.

“Siebe gives us a tremendous amount of credibility because they’re a $5-billion company and one of the major players” that make automation software for industrial, manufacturing and production plants, Slavin said. “If nothing else, we’ll be able to sell products to all Siebe’s companies.

Wonderware has had a roller-coaster history. Founder Dennis R. Morin started the company in 1987 after he had been laid off as a software designer at another company. At the time, there were other software companies making programs to automate production processes. But Wonderware was the first to introduce a program designed to be used with Windows, the Microsoft operating system now running on most personal computers.

As a result, Wonderware became one of the fastest-growing software companies in the country during the early 1990s.

Morin cultivated a whimsical corporate image, from the purple neon lights lining the halls of the company headquarters to the picture of a talking milk cow on the cover of the company’s 1994 annual report. Yet analysts always respected his business acumen.

When Morin left the firm in 1995 to pursue a leisurely lifestyle, the company’s stock began to drop. Trouble on Wall Street continued as Wonderware’s executive offices remained in turmoil and the firm acquired a couple of technology firms with lackluster balance sheets.

The company’s stock, which had been trading as high as $42.75 per share in early 1995, tumbled to the low teens. Over the next two years, Wonderware posted net losses of $20.4 million.

But by 1997, the firm was on the rise again after reorganizing its manufacturing systems group as part of its effort to cut costs.

Wonderware earned $4.3 million, or 29 cents a share, last year as sales climbed 27% to $82.5 million. The software maker’s stock closed the year at $14.13 a share, up 59%.

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Wonderware Merger

Wonderware’s stock surged 48% on news that it is being acquired by a British electronics group. Details on the two firms:

Wonderware Corp.

Headquarters: Irvine

Chairman/president/CEO: Roy H. Slavin

Business: Develops software for industrial automation market

Status: Public (Nasdaq)

Employees: 443

Purchase price: $375 million

Siebe PLC

Headquarters: Windsor, Berkshire, England