Rather than have the company constantly embarrassing it by coming back to it for more money, Samsung Electronics Co Ltd has decided to give perennially loss-making personal computer manufacturer AST Research Inc a decent burial by acquiring the equity it does not already own for what looks a very generous $469m in cash and assumed debt. The Seoul, South Korea company made the proposal in a letter to AST’s independent directors, in which it said it would buy the 51% of AST it does not already own for $5.10 a share. For 1996, the company lost a gut-wrench- ing $418m, up from a loss of $263m last year. In its letter, Samsung said it believes the acquisition is the best way for AST to return to profitability, but is resigned to having to pump yet more cash into the company – It is apparent that in order for AST to continue as a viable competitor in the intensely competitive personal computer industry, significant further support from Samsung will be necessary, the Korean said. The acquisition of 100% ownership of AST by Samsung would give AST direct access to Samsung’s resources and would provide AST with the best reasonably available way to return to profitability – and, not surprisingly, Without Samsung’s ongoing operational and financial support, AST’s ability to survive as an independent company is questionable, it added. AST’s board has formed a special committee of three independent directors to evaluate Samsung’s proposal and to consider other options that may be available to it.
