History (1990): Archive Acquires Cipher Data Products

Archive Corp. (Costa Mesa, CA) finally got what it wanted, it acquired Cipher Data Products Inc. (San Diego, CA).

Both firms announced on March 11, that they had entered into a definitive merger agreement.

Archive’s subsidiary, CAC Corp., will promptly amend its pending cash tender offer for all Cipher’s shares to increase the price from $7.50 to $8.25. If the offer is completed, Archive will, subject to certain conditions, be obligated to acquire the remaining equity interest in Cipher through a cash merger at the same price. The amended tender offer will be conditioned upon, among other things, the tender of a number of Cipher shares which, when added to the 4.6% CAC currently owns, represents a majority of the fully diluted shares.

On March 8, 1990, CAC announced that, as of the most recent extension of its original tender offer, the number of tendered shares, together with its own shares, aggregated approximately 85% of the outstanding Cipher shares.

The amended tender offer will also be subject to the availability of sufficient financing to complete the transaction and pay all related fees and expenses.

Archive has obtained a commitment letter from Barclay’s Bank that has indicated that it expects to execute a definitive credit agreement with Archive by the end of this week.

Cipher has agreed that its board will unanimously recommend acceptance of the amended offer.

The press release from the two companies, dated March 7,1990, proves that a final agreement was nearby: “Cipher/Archive announced today that they have agreed to negotiate the possible acquisition of Cipher by Archive at $8.25 per share. Any such transaction is subject to the negotiation and execution of a definitive merger agreement. Such negotiations are expected to take place over the next few days. There is no assurance that negotiations will be successfully concluded.”

The terms of definitive merger agreement were employed even if a few more conditions still have to be completed. However, the day before, the two companies seemed to have ceased negotiations as the press release of March, 6 proves it: “Cipher announced that representatives of Archive and Cipher met today to discuss a possible negotiated acquisition of Cipher by Archive. The meeting was inconclusive and no agreements or understandings were reached.”

The executives must have seek advice from their pillows. Cipher previously made a whole lot of announcements: “Hearing set on Cipher’s temporary restraining order application against Archive offer (January 24). Court refuses to order redemption of Cipher’s share purchase rights plan (January 29). Cipher board takes Archive letter under advisement (February 14).”

Ended December 31, 1989, Cipher Data Products (San Diego, CA) 2Q was once again not very good. Compared with last year’s same quarter, revenues dropped from $53.9 million to $41.5 million, as a $3.18 million ($.22 per share) profit changed to a $11.98 million ($.82 per share) loss.

This article is an abstract of news published on the former paper version of Computer data Storage Newsletter on issue ≠26, published on March 1990.