Technitrol Inc is to complete its $33.8m takeover of GTI Corp after the two companies patched up a row over the merger agreement. A court battle was in prospect after Technitrol tried to pull out of the deal claiming that San Diego-based GTI was in breach of certain of its representations and warranties in the merger agreement signed in May (CI No 3,476). Whatever the rights and wrongs of the issue, there was strong suspicion that Philadelphia-based Technitrol wanted to pull out because of a sharp deterioration in GTI’s trading position. In its second quarter figures to June 27, GTI recorded a $3.7m loss compared with a profit of $6.5m in the same period last year and revenues plunged 55% to $10.2m. But in September GTI applied for an order in Delaware Chancery Court requiring Technitrol to close the merger and the company has now backed down. It is an expensive concession as Technitrol is getting a lousy deal, paying the originally agreed $3.10 in cash for each share while the market judged the shares to be worth $1.30 before the news was announced. Technitrol’s capitulation will be watched with apprehension by CHS Electronics Inc which faces similar legal action after pulling out of the deal to pay around $320m for Vobis Microcomputer AG of Germany. The GTI sale brought a 50% leap to 46 pence in the share price of UK-based Telemetrix Plc which owns 57% of GTT and will gain $18.6m as a result of the agreement.
