MAI May Get Another Chance
BOSTON — J. H. Whitney & Co., under pressure from its banks, said Thursday that it had entered negotiations to reduce its $1.2-billion offer for Prime Computer Inc.
Such a development might open the way for MAI Basic Four Inc. of Tustin to again enter the bidding for Prime, which it began last November and subsequently modified greatly.
Whitney said two of its banks asked it to obtain more financing after Prime, a Natick, Mass.-based minicomputer maker, reported a $19-million quarterly loss last week. Whitney, a New York-based venture capital firm, indicated that it has been unable to find that financing at its current offer of $21.50 a share for Prime.
“Although we are willing to continue to seek financing at the $21.50 level, we believe, based on our efforts to date, that such financing will probably not be available from our current financing sources on a basis satisfactory to all financial participants,†said Don E. Ackerman, a Whitney partner.
Prime spokesman Joseph Gavaghan confirmed that the companies are negotiating possible changes in their June 23 merger agreement but declined to comment on how much the price might drop.
Prime’s directors agreed to the merger with Whitney while fending off MAI’s hostile $970-million bid.
MAI, a computer firm controlled by New York investor Bennett S. LeBow, has since offered to buy Prime’s minicomputer business for $525 million.
Wall Street analysts said if Whitney cuts its offer significantly, LeBow might be able to launch another bid for all of Prime.
“It’s like an ongoing soap opera on TV. It doesn’t go away,†analyst Jay Stevens of Dean Witter Reynolds Inc. said of the long takeover battle.
An MAI spokeswoman in New York said it had no immediate comment on Whitney’s announcement.
Prime, which has 11,200 employees worldwide, reported revenue of $1.6 billion last year, about one-third from minicomputers. The company also produces computer-aided design and manufacturing systems, a business that was substantially enlarged when Prime acquired Computervision Inc. for $435 million last year.
As the minicomputer industry faces a general slump, Whitney’s banks apparently believe that Prime needs more financing to withstand continuing losses and turn itself around.
