Wall Street’s scepticism at the bizarre bid from MAI Basic Four Inc for Prime Computer Inc was manifest in the fact that Prime’s shares put on only $2 to $17.75 on the announcement, well shy of the $20 it is valued at, and the adventure has all the hallmarks of one of those hysterical last flings that characterises the dying throes of a market craze – that of the excessively leveraged buyout of a company that then has to spend the next five years worrying whether its cash flow will be sufficient to service the mountain of debt: the fact that the share price is below the value of the bid suggests that observers believe there may be no-one more credible prepared to come in with a bid for Prime, and that the MAI offer will simply fail altogether, although its number two position to IBM in the CAD/CAM systems and software market should make it an appealing property to some majors.
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