Alpha Microsystems, the Santa Ana computer maker under pressure from two unsolicited takeover bids, said Monday that it has tentatively agreed to be bought out by a new suitor, TeleVideo Systems Inc. of Sunnyvale, for $8 per share in cash and stock.
The $25.5-million TeleVideo deal came together this past weekend after Alpha Micro executives had scrambled for nearly two weeks to find an acceptable alternative to the bids for control they had received earlier this month.
One of those proposals was a $6-per-share offer for half the company's stock from Point 4 Data Corp. of Tustin.
The other came from Alpha Micro's two co-founders, who were soliciting shareholder proxies to gain control of the board of directors.
"This is a very positive deal for Alpha Micro," said Chairman and Chief Executive Richard Cortese, who admitted relief at the apparent end of two weeks of tensions and uncertainty. "The combined company will be a major player in the market at a time of consolidation."
Executives from Point 4 declined to comment on the latest developments, but a spokeswoman said that the company might have a response today.
Robert Hitchcock and Richard Wilcox, Alpha Micro's two co-founders who were trying to unseat the company's current management because of "violent disagreements" over strategy, are supporting the sale to TeleVideo and are prepared to drop their proxy fight, according to their attorney.
Although the two men were unavailable for comment, their attorney, Harry Hathaway, said the co-founders, who own a total of 25.2% of Alpha Micro's stock, are satisfied that $8 per share is a good price and are more aware now of the "tension and acrimony that would come from a proxy battle."
However, Hathaway said that certain, unspecified "minor details" remain to be worked out and his clients are reserving final judgment on the deal until those matters are settled.
Although both Alpha Micro and TeleVideo have been beset by financial and marketing problems for the last 18 months, analysts said the combination of the two could produce a company that plays off Alpha Micro's strong sales and service network as well as TeleVideo's $70-million cash reserve and its inexpensive, offshore manufacturing facilities.
Further, analysts agreed that the new, combined company, which will have nearly $150 million in annual sales, may be approaching the size required to withstand the ongoing turbulence in the high-tech industry that has seen scores of smaller companies fold or severly contract.
"They are building a mass that will help them survive," said Donald Sinsabaugh, an analyst with Swergold, Chefitz & Sinsabaugh Inc., a New York securities firm. "I see it as a very good move."
Still, some analysts remained skeptical that a marriage of two weakened companies could emerge as a stronger player. In its latest fiscal years, Alpha Micro lost $3.5 million on sales of $48 million and TeleVideo lost $19 million on sales of $103 million.
"Both companies face a lot of problems: competition, a tough industry and continued consolidation," said Sam Navarro an analyst with First Equity Research in New York. "I doubt if the new combined company will be a strong one."
The terms of the purchase call for TeleVideo to pay half the $8 purchase price in cash and the remainder in TeleVideo stock. Other details were not released.
Alpha Micro, which will operate as an independent, wholly owned subsidiary with its current management, said it expected the deal to be completed within five months.
Alpha Micro stock closed Monday at $6.50, up 88 cents for the day. Before the Point 4 offer of $6 per share on Sept. 3, the stock had been trading in the area of $4 to $4.50. TeleVideo stock closed Monday at $2.75, off 12 cents.
Initially, TeleVideo and Alpha Micro executives said, no operating changes or combinations are planned for either company.
Alpha Micro will continue to operate its 350-employee plant in Santa Ana, where it manufactures multi-user computers for small- and medium-size businesses. TeleVideo, once the nation's largest maker of video-screen computer terminals, will continue to make that product as well as its new line of desktop computers in both the Silicon Valley and the Far East.
However, executives from both companies said that they expected their sales forces to represent a combined product line and for Alpha Micro manufacturing to gradually move offshore into TeleVideo's lower-cost Far Eastern facilities.
The combined product line, the executives said, broadens the market for both companies and allows them to project the company as more of a one-stop source for the mid-size business.