While Overland said the two events are definitely linked, it is not clear whether the company distinctly wants to avoid a merger with ADIC, or is simply making sure that it is not going to be bought cheap.
The shareholder rights plan will restrict the purchase of large blocks of Overland stock. According to Overland it is not meant to block any merger offers, but simply to encourage potential buyers to deal directly with the Overland board, and to make sure the board has time to fully evaluate offers.
It was a response to the 13D [SEC] filing made by ADIC, Overland told Computer Business Review yesterday. On Friday ADIC made an SEC filing in which it said that it had acquired 10% of Overland’s stock, and was considering a merger of the two companies.
Overland’s fortunes have not been fabulous recently, and early this month the company revealed that an OEM deal with Hewlett-Packard Co, which is responsible for just over half its revenue, will begin to wind down next year. But asked why it should not welcome a take-over offer from ADIC, Overland declined to comment. Perhaps it will welcome an offer – at the right price.
Overland said of its rights scheme: Irrespective of ADIC, it is prudent for the company to put a shareholder rights plan in place given the current enterprise value of the company.
On the day that Overland revealed the fate of its HP OEM deal, its share price closed 20% lower than the previous day. Although its share price bounced up again when the possibility of an ADIC’s take-over became public, Overland is still trading at a price around 15% lower than at the end of July. The rights scheme is already in effect, Overland said.
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