Venerable mainframer Amdahl Corp has finally lost its independence to long-term investor Fujitsu Ltd, following Fujitsu’s non-hostile bid to purchase all outstanding Amdahl shares for $12 each in cash for a total of $850m. Fujitsu already owns 42% of Amdahl’s shares. The announcement, made just after midnight in Japan yesterday, is viewed by Fujitsu as […]
Venerable mainframer Amdahl Corp has finally lost its independence to long-term investor Fujitsu Ltd, following Fujitsu’s non-hostile bid to purchase all outstanding Amdahl shares for $12 each in cash for a total of $850m. Fujitsu already owns 42% of Amdahl’s shares. The announcement, made just after midnight in Japan yesterday, is viewed by Fujitsu as a consolidation of its position as a global services provider in the US in particular, and, with ICL Plc, the completion of a three-continent line-up of companies. The $12 price was a slight premium on their closing price of $11 and 7/8 June 29 in the US; the tender offer will close September 5 and was approved unanimously by the non-Fujitsu Board members of Amdahl. Although Amdahl will become a wholly-owned subsidiary, Fujitsu’s executive vice president Takashi Maruyama, speaking at the press conference in Tokyo, said it anticipates no changes in customer relationships and no reduction in employment levels as a result of the acquisition. The Amdahl brand will remain. In Europe, there is little overlap with the business of ICL, although consolidation is a possibility in Asia-Pacific regions, such as Australia, where both companies have a subsidiary. Ties between Fujitsu and Amdahl began 25 years ago when Fujitsu made its initial investment in a company started by ex-IBM executive Dr. Gene Amdahl. Amdahl’s first computer 470V/6, a machine based on the Fujitsu mainframe hardware technology implemented in the Fujitsu M190 series, but running the IBM operating system, was sold to NASA in June 1975. According to Fujitsu, the request for a higher level of involvement came from Amdahl at the end of June, suggesting that the move was made to reassure Amdahl’s customers and staff in the face of the company’s recent poor results. Fujitsu intends to finance the acquisition of the outstanding shares from its internal resources – its own cash flow position is improving, although it still predicts a $593m deficit position for this financial year to end March 1998, improved from $1,700m at the end of March 1997 – and from borrowings in a form still to be decided. The move means that, with Hitachi Ltd, around 25% of the mainframe compatible market is now owned by Japanese companies, the other 75% owned by IBM itself. Meantime, Amdahl shareholders were less than impressed with the price Fujitsu paid for the shares, calling the $12 per share grossly inadequate giving due consideration to the Company’s growth and anticipated operating results, net asset value and profitability, and immediately filed a lawsuit seeking to stop the sale. No takeover premium is being paid.