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November 15, 1988


By CBR Staff Writer

Little $400m-a-year MAI Basic Four Inc stunned the industry late Monday night by launching a $970m tender offer for Prime Computer Inc, nearly four times its size, saying that a combination of the Tustin, California Basic language business systems manufacturer with the Natick, Massachusetts minimaker makes excellent business sense. The $20-a-share offer is widely seen as a move by New York investor Bennett LeBow, who with his partner William Weksel owns 43% of MAI, to put Prime into play and flush out a rival bidder at more than the $20 a share currently on offer which compares with a price just before the bid of $15.875. As reported (CI No 1,058), possible bidders that have been named include AT&T Co, and, much less likely, one of the Baby Bells. Prime became vulnerable as soon as its weak profit performance following acquisition of ComputerVision Corp early this year was followed by news that chief executive Joe Henson planned to step down in a few months. If MAI were to succeed in its bid, the resulting combination would be carry a well-nigh intolerable debt burden: MAI has a commitment from the Canadian Imperial Bank of Commerce for $325m in financing, is confident that it can syndicate another $325m to other banks, and has Drexel Burnham Lambert saying it is very confident that it can raise $875m through a private plac ing of notes – haven’t the guys at Drexels been reading the papers lately? The bid is conditional on 67% of the shares being tendered by December 14 – MAI currently has 4.1% of those outstanding, 3.1% fully diluted, and on courts in Delaware and Massachusetts lifting Prime’s poison pill and other obst acles to the takeover. In the nine months to September, Prime did $33.4m net on turnover of $1,160m, and in the nine months to June, MAI did $18.7m net on sales of $302m.

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