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August 11, 1988


By CBR Staff Writer

Simi Valley, California-based data communications and local area network equipment manufacturer Micom Systems Inc has given more details of its proposal to be acquired for $301m by a unit of the Odyssey Partners investment group (CI No 990). MS1 Acquisition Group – if this bid fails, do they plan to form an MS2 for a second attempt? – is to pay $16 a share for Micom’s 18.8m shares in a deal structured as a leveraged buyout, in which money is borrowed for the acquisition on the promise that it will be paid back out of cash generated by future operations of the acquired company, or by selling assets. Micom was effectively driven to put itself up for sale after a dispute between management and three dissident directors. According to the Los Angeles Times, the dissidents, including founder William Norred, were unhappy with the company’s lagging stock price and with what they considered an overpriced acquisition of Spectrum Digital of Herndon, Virginia, last year. Other dissident directors were San Diego investors John and Sally Thornton, the company’s largest holders with 2.3m shares. Norred founded the Micom 15 years ago and stepped aside as chief executive in 1985. Micom originally sought to buy out the dissidents, but then hang out a for sale sign after offers emerged. It allowed a $15.62-a-share buyout offer from Welsh, Carson, Anderson & Stowe IV and Warburg Pincus Capital Co to elapse. New York-based Odyssey, founded in 1982 by former Oppenheimer & Co executives, has been involved in a number of investments, and subsequent asset sales are said to have netted the partnership about $200m, so a break-up of Micom looks likely.

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