GTI Corporation is taking legal action to try and force Technitrol Inc to complete its proposed $33.8m acquisition of the company. It is seeking an order in Delaware Chancery Court requiring Technitrol to close the merger agreed back in May. Philadelphia-based Technitrol wants to pull out of the deal claiming that GTI is in breach of certain of its representations and warranties in the merger agreement. But the suspicion on the GTI side is that Technitrol wants to pull out because of GTI’s deteriorating financial performance which has left it with a stock market value less than half what Technitrol agreed to pay. The case will be watched with some interest because sharp changes in market conditions leave many companies with second thoughts about merger agreements – though the GTI side insists that a downturn in its fortunes do not constitute grounds to rip up the agreement. In its second quarter to June 27, GTI saw revenues plunge 55% to $10.2m and management blamed downward pressure on prices for networking products for which the company provides components. The court case is a huge disappointment to UK company Telemetrix Plc, which owns 57% of GTI and saw in the Technitrol deal a way to get out of what has been a lousy investment. Through its Valor Electronics subsidiary, GTI is a multinational manufacturer of magnetics-based components for signal processing and power transfer functions used in networking, telecommunications and broadband products.
