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Samsung Set to Acquire AST Research

Computers: The Irvine company's board approved a deal for the Korean firm to buy the remaining 51%, sources say.

April 15, 1997|GREG MILLER | TIMES STAFF WRITER

AST Research Inc. is expected to announce today that it has agreed to be acquired by Samsung Electronics Co., marking the final chapter for a computer manufacturer that was started by three immigrants in 1980 and went on to become an industry giant before stumbling badly in recent years.

AST's board of directors, acting on the recommendation of a special committee, voted Monday to approve the deal, three months after it was proposed by Samsung, sources close to the negotiations said.

Samsung, the Korean electronics giant, already had a 49% stake in Irvine-based AST through a series of financial bailouts beginning with a $378-million cash infusion in 1995. In January, Samsung offered to acquire the remaining shares of the company for $469 million in cash and assumption of debt.

The final price approved by AST's board was not immediately known, although it was expected to be slightly higher than Samsung's initial proposal of $5.10 per share.

Reached at the company's headquarters Monday evening, AST officials declined to comment.

AST, which once ranked among the top six computer manufacturers in the nation, has seen its market share dwindle amid mounting losses in recent years as the company struggled with manufacturing problems, a troubled acquisition and management inadequacies.

The company has reported 11 consecutive quarters of losses, and posted a loss of $418 million for 1996. AST is already largely run by Samsung, which has installed a number of executives in top AST posts, including Chief Executive Y.S. Kim.

The Samsung offer angered many AST shareholders, who said the offering price was too low and that Samsung executives are partly to blame for the company's recent troubles.

But there appears to be little chance that the Samsung takeover could be blocked. Samsung is expected to make a tender offer for the outstanding AST shares within five days, beginning a process in which shareholders turn in their holdings for cash. Even if Samsung were to acquire only an additional 2% of the outstanding shares, it would have control of the company and be able to complete the merger.

The deal was unanimously approved Monday by a special committee comprised of AST's three outside directors--members of the board who are not employed by either Samsung or AST. Later, the full board also approved the deal unanimously, sources said.

Samsung, which makes many computer components, including chips and monitors, has been interested in gaining a stronger foothold in the U.S. computer industry.

W.R. Choi, Samsung's executive director for international finance, said in January that AST "still has tremendous value in its brand name and operations."

But others in the industry aren't so sure that AST, after such a prolonged spiral, can be salvaged. It certainly is little more than a shell of the company that soared to the top of the industry in the 1980s.

For years, AST was one of Southern California's greatest high-tech success stories. The company was founded in 1980 by Albert Wong, Safi Qureshey and Tom Yuen, who used their first initials to form the company name.

The three men combined their various strengths to make AST one of the most nimble computer manufacturers in the industry, often beating powerhouses such as IBM to market with the latest technology.

But following a series of squabbles, Wong and Yuen left the company, leaving Qureshey alone as chief executive for several years.

In November 1995, Qureshey was replaced by Ian Dierry as CEO, and he stepped aside less than a year later to make way for Kim.

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