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Friday, October 9, 1998
"One [F]ool at least in every married couple." -- Henry Fielding
Inacom and Vanstar Tying the Knot
Inacom Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ICO)") else Response.Write("(NYSE: ICO)") end if %> and Vanstar Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VST)") else Response.Write("(NYSE: VST)") end if %> are... goin' to the chapel, and they're... gonna get married... (You remember the tune.) Omaha-based Inacom plans to acquire Atlanta-based Vanstar for about $794 million in stock, plus assumed debt and preferred shares, creating the world's largest corporate distributor of IBM, Compaq, and Hewlett-Packard computers. Inacom is known for its product-management operations, while Vanstar's specialty is in computer consulting and services.
Vanstar shareholders will receive 0.64 of an Inacom share for each Vanstar share, which values Vanstar at $10.76 a share, based on Inacom's closing price yesterday, and represents a 28.5% premium to Vanstar's last trading price yesterday of $8 3/8 ($8.375). Warburg Pincus Capital Company, which owns a 38% stake in Vanstar, has already agreed to vote in favor of the transaction. The companies expect to close the deal in the fourth quarter of this year or the first quarter of next year.
Inacom expects to take a one-time pre-tax charge of $120 million to $155 million and incur an additional $40 million to $80 million in integration and alignment costs. But the combined company anticipates benefiting from economies of scale and saving more than $150 million a year. The new Inacom will have revenues totaling roughly $7 billion, including about $800 million from computer services, which Inacom CEO Bill Fairfield said is the strength of its business model compared with direct-market competitors such as Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>.
News to Go
Most Asian markets rallied today on the yen's rise against the dollar, but the Nikkei fell 1.1% to 12879.97, its lowest level since December 1985, on worries that exporters will be hurt as their products become more expensive and the value of earnings abroad decreases. Hong Kong's Hang Seng Index surged 7.2% to 8506.79, the Korea Composite jumped 7.5% to 327.96, Indonesia's JSX Index gained 5.3% to 303.783, and the Philippines' PSE Index added 4.1% to 1301.36.
A U.S. District Court judge dealt a setback to diversified manufacturer AlliedSignal's (NSYE: ALD) efforts to take over electronic connectors maker AMP Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMP)") else Response.Write("(NYSE: AMP)") end if %> for $9.8 billion. AlliedSignal has been seeking written consent from AMP shareholders to place its officers and directors on AMP's board for the unsolicited takeover. The judge ruled that AlliedSignal's nominees cannot stand for election unless they declare a "fiduciary duty solely to AMP."
Troubled hedge fund Long-Term Capital Management has used all but about $1.7 billion of the $3.625 billion a group of financial institutions pumped into the fund last week under a Fed-brokered deal, according to The Wall Street Journal, citing "people close to the matter." Much of the spent $1.9 billion has been used to pay off a $483 million Chase Manhattan loan, cancel repurchase agreements, and pay finance charges on trades with other parties.
Interactive multimedia company Diamond Multimedia Systems (Nasdaq DIMD) reported after yesterday's close a third quarter loss of $0.63 a share, compared with a $0.07 loss a year ago and analysts' mean estimate of a loss of $0.16.
Live entertainment events promoter and producer SFX Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFXE)") else Response.Write("(Nasdaq: SFXE)") end if %> and event management, TV production, marketing, and talent representation company Marquee Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: MRT)") else Response.Write("(AMEX: MRT)") end if %> announced that they are discussing the possibility of restructuring SFX's proposed acquisition of Marquee because the deal is unlikely to go through under the terms of their existing agreement. The current terms provide for a stock swap in which Marquee shareholders would receive $6 to $6.30 of SFX stock for each Marquee share. Marquee closed yesterday at a dismal $1 3/8, substantially lower than SFX's offering price.
For whatever it's worth, Business Week's dubious "Inside Wall Street" column highlighted tobacco maker Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>, drugmaker Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %>, and regional phone company Bell Atlantic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> as stocks that "may just defy gravity." The weekly rag quoted Rob Lyon, president and chief investment officer at Institutional Capital in Chicago, who has price targets of $65 a share for Philip Morris, $130 a share for Bristol-Myers Squibb, and $65 a share for Bell Atlantic.
Earnings Announcements Today:
Burr-Brown <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBRC)") else Response.Write("(Nasdaq: BBRC)") end if %> -- Q3 mean EPS estimate: $0.20; last year: $0.23
Fastenal <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FAST)") else Response.Write("(Nasdaq: FAST)") end if %> -- Q3 mean EPS estimate: $0.38; last year: $0.30
Potlatch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PCH)") else Response.Write("(NYSE: PCH)") end if %> -- Q3 mean EPS estimate: $0.40; last year: $0.49
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
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