Financially ailing Applied Circuit Technology has sold its last major computer-related division and plans to move this week from Anaheim, where the company was founded, to Gardena, where it will become a pharmaceuticals firm.
ACT's disk-drive testing equipment division was sold to Shugart Corp., a manufacturer of computer peripheral equipment based in Irvine, company officials said Monday.
An earlier offer from Sanpao Group of San Francisco for the ACT systems division was turned down after Shugart made a better offer, Don M. Sweatman, ACT's chairman and chief executive, said.
Sweatman had said in March that ACT would sell to Sanpao for an undisclosed amount, half in cash and the rest in notes payable over a two-year period. Sale of the division, he said at the time, would allow ACT to concentrate all of its resources on the two pharmaceutical units it bought a year ago.
On Monday, Sweatman said Shugart officials approached ACT in mid-April with an offer "35% higher" than the price Sanpao offered. He refused to disclose the amount offered by either firm and said both offers were unsolicited.
The sale of the systems division came less than two weeks after it received $7.5 million in new orders for test equipment. The substantially higher Shugart offer was based in large part on those orders, Sweatman said. The Shugart deal was completed Thursday, he said.
Sweatman is part of a Texas investment group that acquired control of ACT last year. He said last month that ACT had not been planning to sell the test equipment division but would realize a "substantial gain" from the sale. That gain, he said, would "help the shareholders' equity very considerably."
During the fiscal year ended Oct. 31, ACT's shareholders' equity fell to $3.9 million from $12.7 million a year earlier.
Elaine Grecco, Shugart's director of materials, said officials at her company expect the ACT test equipment unit to "increase our revenues by 50%." The purchase, she said, "just agrees with our entire strategy of buying (computer) peripheral companies."
Grecco said the division will continue to operate in Anaheim under current management. "We don't expect any layoffs," Grecco said. "And it will continue to operate under the name Applied Circuit Technology."
Sweatman said ACT officials are negotiating with two other companies for the sale of its remaining electronics divisions--ACT/Magnetic Technology service and repair unit and Certel, which manufactures certification equipment for floppy disk materials.
Once those divisions are sold, ACT will change its name.
The company is moving its headquarters this week to Gardena, where its two pharmaceuticals divisions--Whiteworth International and Towne Paulsen--are based.
Whiteworth, which was acquired for $2.1 million in cash and notes early last year, manufactures over-the-counter medicines; Towne Paulsen makes generic drugs.
Together, the two units contributed $11 million of the $19.8-million in revenue that ACT reported for the fiscal year ended Oct. 31, Sweatman said earlier.
During that 12-month period, ACT had an $8.9-million net loss, compared to a $401,153 net loss a year earlier.