Lichtenstein Group Buys Stake in Sync Research
An investment group led by Warren Lichtenstein acquired a 9.7% stake in Sync Research Inc. and said it may decide to propose a sale of all or a portion of the Irvine network-software company if its shares remain undervalued.
The investors spent $710,437 to buy 339,822 shares of Sync from July 19 to Aug. 19, according to a report filed this month with the Securities and Exchange Commission. The group paid $2 to $2.28 a share, the filing said.
Lichtenstein could not be reached for comment Monday.
Sync Chief Executive Richard W. Martin said he was unperturbed by the actions or intentions of Lichtenstein’s investment group.
“People buy and sell stock all the time,” Martin said. “We firmly believe the company is on the right track.”
Sync is a former high flier whose shares more than doubled in their first day of trading in November 1995, moving as high as $208.75 when adjusted for later stock splits. On Monday, the stock closed at $2.75 a share, up 44 cents.
The maker of computer networking devices reported a net loss of $1.3 million, or 37 cents a share, for the second quarter, compared with a net loss of $3 million, or 85 cents a share, for the same period in 1998. Revenue dropped 38% to $4.4 million. The company said it is reducing operating costs by downsizing its Norton, Mass., facility by 50%.
In June, the company completed a reverse 1-for-5 stock split to push its stock high enough to avoid delisting. Shares had hovered around the 50-cent mark before the reverse split.
The minimum level required for Nasdaq listing is $1 per share.
Initially, Sync had drawn praise for its line of devices that helped companies get more mileage from aging computer networks. But in recent years, the company has been plagued by increased competition and deals that were slow to develop.
Lichtenstein and Steel Partners II LP may decide “to propose a transaction whereby all or a portion of the company” be sold should its shares “continue to be undervalued,” according to the filing. The investors “may seek to participate in such a transaction or seek to acquire control of the (company) . . . in a negotiated transaction or otherwise,” the filing said.
Lichtenstein, who maintains offices in New York, has taken stakes in companies such as General Housewares Corp. and Ronson Corp., then pushed for sales to boost stock prices.
In at least one case, at Aydin Corp., Lichtenstein was successful in his activism. The 34-year-old investor was part of a group that pushed for a sale of the telecommunications-equipment company, which was sold to L-3 Communications Holdings Inc. this year.
Staff Writer Marc Ballon and Bloomberg News contributed to this report.
