EMachines Director Offers a Buyout
EMachines Inc., which recently called off a search for an investor or buyer, said Friday that one of its founding directors has offered to purchase the company for $117.5 million in cash, well above its current market value.
In a letter to the Irvine maker of low-cost personal computers, director Lap Shun “John” Hui of Garden Grove said his offer of 78 cents a share already has received support from investors holding 55% of the stock. He owns about 1.1%.
Hui also revealed in his letter that his offer, made public late Friday, is an extension of a bid he made privately Oct. 30 for the nation’s third-largest vendor of desktop PCs in stores. The offer had been due to expire last Tuesday.
The extension from one of Hui’s companies, EM Holdings Inc., is scheduled to expire Wednesday. EMachines, which dropped Credit Suisse First Boston as a financial advisor in September, rehired the investment banking firm to evaluate the offer.
Hui’s offer was a friendly one that the company expected, said his spokeswoman, Diana L. Maranon. Hui would not comment. Wayne R. Inouye, EMachines’ president, concurred, though he said Hui’s initial offer caught him off guard.
“There aren’t very many companies like EMachines--trading at a fraction of its cash value with very little debt, and with market share increasing in a market that is contracting,” Inouye said.
Executives told Wall Street analysts in releasing quarterly results Oct. 23 that money-losing EMachines, struggling to gain its financial footing, would break even or post a slight profit for the final three months of the year.
Hui’s offer is 81% higher than Friday’s closing price of 43 cents a share, down 5 cents, in over-the-counter trading. Removed from Nasdaq after its shares fell below $1 this year, EMachines stock sank to 14 cents a share two months ago but has climbed steadily since.
Hui needs support from holders of at least 90% of the shares to complete a so-called short-form merger, a method for acquiring a company with a minimum of delays and red tape.
