Wall Street analysts predicted Monday that an enhanced buy-out offer will emerge for Informatics General, a Woodland Hills software maker that has been trying to fend off a hostile takeover effort by Dallas-based Sterling Software.
Two New York arbitrageurs, specialists who trade in the stock of takeover targets, said they expect Informatics eventually to succumb to an offer of $28 or more a share, at least $2 above the latest offer from Sterling.
The stock has been subject to trading by arbitrageurs in the wake of a cash offer from Sterling. The Dallas company first offered $25 a share in mid-March, later sweetened that by $1, then began a proxy fight to overcome the resistance of Informatics' management. The stock closed on the New York Stock Exchange at $26 a share on Monday, down 25 cents.
Arbitrageurs commonly speculate on the stock of takeover targets, hoping to profit on the spread between the initial stock price and the final, higher price of the takeover bid.
Expects $28 a Share
"The consensus value seems to be a minimum of $28," said one arbitrageur, who said his firm does not hold any stock in Informatics. "Twenty-six dollars is the floor. It can only go higher," said the trader, who, like others in the sensitive field of arbitrage, would not be quoted by name.
He predicted that the final deal will be in the $28-to-$30 range, but another arbitrageur said he expected a sale to Sterling or some other suitor "at around $28."
Informatics, meanwhile, continued to solicit offers through its investment advisers, Smith Barney, Harris Upham. Informatics has called the $26 offer inadequate.
Sterling's unfriendly takeover bid has spawned an increasingly bitter proxy fight marked by lawsuits in at least three cities and blunt newspaper advertisements, including one placed by Informatics contending that Sterling Chairman Samuel E. Wyly is unfit for the Informatics board. The ad pointed to a 1979 consent decree in which Wyly resolved charges filed against him by the Securities and Exchange Commission.
According to a published report in 1979, the SEC alleged that Wyly violated federal securities laws in 1976 and 1977 while chairman of Wyly Corp. by making an undisclosed special arrangement with a bondholder in an effort to assure the success of a planned debt exchange. Wyly consented to an injunction barring him from violating various provisions of federal securities law.
A spokesman for Wyly confirmed that he signed a consent order in which he neither admitted nor denied guilt.
Informatics also accuses Sterling of using misleading advertising, which Sterling denies. Sterling, in turn, has accused Informatics' board of ignoring its offer to discuss a higher price.