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Gradco Systems Agrees to Acquire New Jersey Firm

October 25, 1986|GREG LUCAS | Times Staff Writer

Gradco Systems Inc. said Friday that it has signed an agreement to acquire New Jersey-based Ziyad Inc. for approximately $24.5 million.

The deal--30% in cash and 70% in Gradco common stock--will merge two companies at opposite ends of the paper-handling business. Ziyad creates paper feeders for laser printers, and Gradco is the nation's largest supplier of paper sorters used on copy machines, according to Gradco's chairman, Keith B. Stewart.

Stewart said consolidation of the two companies is slated for the fourth quarter of Gradco's 1987 fiscal year, which ends March 30.

Ziyad has a net worth of $28 million, Stewart said, of which $20 million is in cash, marketable securities and receivables. Through the acquisition, Gradco will gain the cash needed for the transaction--approximately $7.3 million--with the balance being paid in Gradco stock valued at between $10 and $12 a share.

Upon consolidation, Gradco's book value will more than double, Stewart said, and acquisition of cash-rich Ziyad will enable Irvine-based Gradco to retire its $4 million in short-term debt.

Ziyad, which currently employs 210 people, will be cut back by at least 130 employees and will operate as a wholly owned subsidiary of Gradco, Stewart said. Manufacturing will be conducted overseas in Korea and Japan, where Gradco already does most of its manufacturing, and in Thailand, where Ziyad maintains a facility.

Approval by Gradco's board and Ziyad's stockholders is expected within the next 30 days, Stewart said. The deal is subject to federal Securities and Exchange Commission approval which, Stewart said, could take another 30 days or more.

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