California Amplifier Fights Takeover Bid : Tender offer: Directors of the Camarillo maker of home-satellite dishes advise stockholders to reject a Colorado investor’s proposal.
The focus of a brewing battle for control of financially struggling California Amplifier Inc., a Camarillo maker of home-satellite dishes and other microwave telecommunications products, has shifted back to a Colorado investor who made a $12.5-million unsolicited tender offer for the company last month.
But a takeover would now be much harder to mount due to some recent moves by the company.
On Friday, directors of California Amplifier recommended that stockholders reject the $3-a-share tender offer by Charles W. Ergen. The company said the offer was “inadequate and not in the best interests of the company or its stockholders.”
Ergen, who among other things heads Echosphere Corp., an Englewood, Colo.-based distributor of satellite-television products, could not be reached for comment. He currently owns 5.9% of California Amplifier’s 4.42 million shares outstanding.
His offer is due to expire Sept. 20 and is conditioned on a minimum of 2.1 million shares being tendered, which would give Ergen control of the company.
California Amplifier’s stock, which had not closed above $2 a share for the previous two years, traded as high as $3.125 in over-the-counter trading after Ergen’s offer on Aug. 23, suggesting that investors thought a bidding war might ensue. The stock closed Monday at $2.875 a share, down 12.5 cents.
In another move that seeks to preempt a takeover by Ergen, California Amplifier’s board has adopted a shareholder rights plan--more commonly known as a “poison pill.”
The plan would make any unwelcome attempt to wrest control of the company prohibitively expensive by allowing existing shareholders to buy additional California Amplifier stock at half-price. It would be triggered if any individual becomes the owner of more than 20% of the company’s common shares outstanding.
In addition, California Amplifier said that none of its executive officers and directors, who own a total of 34.9% of the company’s stock, would tender their shares to Ergen.
Barry W. Hall, California Amplifier’s chairman and chief executive, previously said that Ergen had indicated to company officials earlier this year that he was interested in a possible merger. Ergen was told the company wasn’t for sale, Hall said, but the investor was invited to make a formal offer to California Amplifier’s board.
Instead, Ergen took his case directly to the company’s shareholders.
In documents filed with the Securities and Exchange Commission in connection with the tender offer, Ergen said he would focus on adding new products “with greater market appeal.”
California Amplifier, which lost $508,000 on $14.3 million in revenue in its fiscal year ended March 2, has been making progress toward improving its financial health and has been moving away from defense-related products in favor of home-satellite dishes and other commercial lines.
In the fiscal first quarter ended June 1, California Amplifier’s profit more than doubled to $127,000 from $55,000 a year earlier, while sales edged up to $3.7 million from $3.5 million.
The company said it expects to report a profit of about $277,500 for its fiscal second quarter ended Aug. 31, compared to an $111,000 profit a year earlier.
