Symbol Technologies Inc, the manufacturer of handheld computers, radio data communications and bar code scanning products has expressed an interest in acquiring all the outstanding shares of Telxon Corp, a supplier of wireless communications products for various vertical markets. The offer is for $38 cash per Telxon share, valuing the company at slightly more than $800m, including options and convertible debt. Although the news sent Telxon’s shares up, they closed a few dollars shy of the offer price, indicating market uneasiness about the deal going through as planned. The two companies are sometime partners, sometime competitors, and in 1996 Telxon sued Holtsville, New York-based Symbol for making false and misleading representations about its own and Telxon’s radio products with regard to standards compliance, upgradability, interoperability and availability. The suit was settled last year. Symbol chairman and chief executive Jerry Swartz said his company has been seeking a friendly acquisition deal for several years and emphasized that all aspects, including the possibility of offering stock instead of cash, are negotiable, but yesterday did not sound like a man who is prepared to take no for an answer this time. He said it represents a chance for Telxon shareholders who have missed out on the greatest bull run in history to accept the offer that represents an all-time high for Telxon shares, which he said are trading at 1987 levels. We strongly believe these companies belong together. For its part, Akron, Ohio-based Telxon merely acknowledged the receipt of the offer, which is currently being analyzed by its financial and legal advisors and its board of directors will review the offer in due course. However, the company reportedly has various anti-acquisition poison pill measures already in place. It has not replied to Symbol’s letter, which was dated April 8. Swartz said the company’s bank, Bear Stearns told the company it is easily financable and he expects to use banks loans to finance any deal. He also expects the addition of Telxon to be earnings accretive immediately, after one-time acquisition costs. He said that the company already owns some Telxon’s shares, but would not say how many. He also would not comment on whether the company would go for a tender offer if Telxon did not accept the transaction. Genesis Merchant Group Securities analyst Charles Thomas lowered his rating on Telxon, saying the $38 offer fully valued the company. Meanwhile, Symbol reported first quarter net profits up 27.4% to $19.6m or $0.32 per share, on revenues that rose 19.6% to $213.3m. The results were two cents ahead of First Call’s consensus estimate. Symbol closed up Tuesday $1.3125 at $37.3125, with Telxon up $4.4375, or 16% at $32.125
