The news that AS/400 reseller XL/Datacomp Inc, Hinsdale, Illinois has reached a definitive merger agreement comes as no particular surprise – the company announced last month that it was in talks that could lead to a share exchange merger (CI No 1,708). What does come as something of a surprise is that its suitor is Louisville, Colorado-based Storage Technology Corp. StoraegTek is to exchange 0.2675 of a share for each of XL/Datacomp Inc’s 12m shares outstanding, valuing the company at about $156m and involving StorageTek in issuing about 3.21m new shares to add to the 36.8m or so out. Principal shareholders of XL/Datacomp holding about 27% of its outstanding shares have granted StorageTek irrevocable proxies to vote in favour of the merger and XL/Datacomp has granted StorageTek a shut-out option to buy 2.4m XL/Datacomp shares at $13.375 a share if any third company tries to muscle in on the party. XL/Datacomp blamed delays in getting D Model AS/400s from IBM Corp for what it warned would be negligible profits for the quarter to June 30. All StorageTek’s recent diversifications have been to take it away from dependence on the IBM market so the choice of acquisition is something of a surprise; however StorageTek is not currently a significant player in the AS/400 market, and no doubt hopes that it will be able to fit out many of the AS/400s placed by XL/Datacomp with its own storage peripherals and perhaps printers as well. The market response was to mark XL/Datacomp shares up $1.375 to $12.00 and to mark StorageTek down $1.375 to $48.50; the company has seen its share price come up off a 12-month low of just $11.
