Beleaguered projector giant InFocus on Wednesday said it received an unsolicited acquisition offer from an unnamed source, just nine days after it entered into a merger agreement with Image Holdings Corp.
InFocus said in a statement that it has notified IHC of the unsolicited proposal and "intends to enter into discussions with the person who submitted the unsolicited proposal and may furnish due diligence information to that person."
The Wilsonville, Ore.-based company said that it will not disclose the terms or person connected to the alternative transaction, except when it is legally required to do so.
InFocus also said that its board of directors is still in favor of the merger and that it "continues to unanimously recommend that InFocus shareholders accept and tender their shares."
After it sat on the block for five months after offering itself for sale, on April 13 InFocus said that it entered into a definitive merger agreement with IHC, an Oregon-based company run by entrepreneur John Hui. The companies said the deal is expected to close in the second quarter.
"Operating as a privately held company is expected to reduce our costs and facilitate our ability to focus on longer-term priorities," said Bob O'Malley, president and CEO of InFocus, in a statement at that time. "While this is a very big step for InFocus internally, our commitment to delivering innovative projection solutions has not changed."
Under the terms of the agreement, IHC and its wholly owned subsidiary, IC Acquisition Corp., made an all-cash tender offer to acquire all outstanding shares of InFocus stock at $0.95 per share, or roughly $39 million.
The offer represents a 36 percent premium over the April 9 closing price of $0.70 per share, the last trading day prior to the agreement, and a 90 percent premium over the last 30-day average closing price of $0.50 per share. The acquisition is subject to the tender of a minimum of 65 percent of outstanding shares of InFocus.
In heavy trading Wednesday, InFocus stock climbed 29.6 percent from $0.91 to $1.18 per share. The stock closed up four cents at $0.95 per share.
Taking the brunt for the faltering company's failure is O'Malley, who was brought into hornet's nest in 2007 by major investor Caxton Associates, which held 11 percent of InFocus' outstanding stock. The group had demanded that after 11 consecutive quarters of losses, InFocus should either put itself up for sale or let Caxton appoint its own management team and bring in new directors.
InFocus then worked with Bank of America to seek a buyer but did not complete a deal; the bidding companies have never been disclosed. The InFocus board then brought in two new board members and replaced CEO Kyle Ranson with O'Malley, who had been former senior vice president of marketing at Tech Data.
Even in the wake of being thrown a lifeline by IHC, InFocus' disgruntled shareholders are far from happy and announced a lawsuit Monday. A Pennsylvania firm representing the shareholders said in a press release that it was investigating "possible breaches of fiduciary duty and other violations of state law related to the InFocus board's approval of the proposed merger."
"The transaction appears to be unfair, in part, given that InFocus stock was trading at over $1.40 a share as recently as September 2008 and that the merger agreement provides that InFocus would be required to pay Image Holdings a termination fee of $1.2 million and reimburse expenses up to $750,000."
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