Gradco to Make Buyout Plan Announcement
IRVINE — Gradco Inc. said it will make an announcement by Monday regarding a proposal by company management to purchase the Irvine office equipment maker in a leveraged buyout, which an analyst speculated would be financed by Japanese interests.
In late September, Gradco founder and chairman Keith B. Stewart said he was considering buying the company, the world’s largest supplier of collating and sorting equipment for office copiers. At that time, Stewart, who controls 12% of Gradco’s stock, said he had not made a formal proposal to the firm’s board of directors.
Newton H. Lee, Gradco’s corporate secretary, said that because of recent heavier-than-normal trading activity in Gradco stock, “there will be some sort of release made by Monday.” He declined to elaborate on the nature of the release.
Gradco stock, which is traded over the counter, has climbed higher in moderately heavy trading the past two days. It closed Wednesday at $18.25 a share, up 50 cents, with 273,500 shares changing hands, about double the company’s average daily volume.
One Los Angeles investment analyst speculated that the Gradco buyout plan may involve a Japanese bank or investment consortium that would help finance the purchase of the company.
Donna M. Hostetler, director of research at Crowell, Weedon & Co. in Los Angeles, said that many of Gradco’s biggest customers are Japanese companies and the Irvine firm previously has said it wanted to sell part of its Gradco Japan Ltd. subsidiary in a Japanese public offering. The subsidiary accounted for roughly one-third of Gradco’s sales of $115 million in the 1989 fiscal year ended March 31.
“Our scenario would be that a Japanese bank or consortium would do the buyout, and then Gradco would go public in Japan,” Hostetler said.
Lee said the company “was not in a position to comment” on speculation about Japanese involvement in the buyout.
Gradco has ties to nearly all of Japan’s leading copier manufacturers, such as Canon, C. Itoh, Fuji, Ricoh and Toshiba.
At current prices, Gradco’s 6.3 million shares outstanding would have a value of about $115 million. Not counting Stewart’s stake, the remaining 88% of the company would be valued at about $101 million. Gradco went public in June, 1983, at $18 per share.
In recent months, two of Gradco’s largest U.S. stockholders have reduced their stake in the company. From July to September, Dalfort Corp., a Dallas aircraft firm controlled by the Chicago-based Pritzker family investment group, sold 171,500 shares of Gradco stock, reducing its stake in the firm to 288,200 shares, or 4.5%. In October, Insurance & Annuity Teachers of New York sold all its 270,000 shares of Gradco stock.
