Judge Issues, Then Stays Injunction In Takeover Case
Dec. 13, 1988
BOSTON (AP) _ A federal judge issued an injunction Tuesday blocking MAI Basic Four Inc.'s hostile $970 million bid for Prime Computer Inc. but immediately suspended the order pending an appeal.
In a written ruling, U.S. District Judge A. David Mazzone said MAI Basic had violated the federal Securities and Exchange Act and failed to detail its plans for if the takeover succeeds.
After oral arguments, Mazzone last Friday said he would issue the injunction and then stay it, and on Tuesday he detailed his reasoning in the written order.
Prime sued MAI Basic, controlled by New York investor Bennett S. LeBow, last month on the grounds that its $20 a share offer failed to make a full disclosure under federal securities guidelines.
Prime stock fell 50 cents to $16.12 1/2 a share Tuesday in New York Stock Exchange trading.
In his ruling, Mazzone said MAI Basic, a Tustin, Calif.-based computer firm, failed to disclose the extent of the relationship between Brooke Partners L.P. and Drexel Burnham Lambert Inc. and between LeBow and Drexel in advising and financing the deal.
The judge also said MAI Basic concealed information concerning past violations or alleged violations of federal securities laws by LeBow and William Weksel, another principal in the bid.
Mazzone's injunction would halt the bid until the additional disclosures are made, but the injunction is on hold until MAI Basic appeals to the 1st U.S. Circuit Court of Appeals in Boston.
Prime, a Natick-based computer firm about four times the size of its hostile suitor, late last month rejected the $20-a-share offer. The offer is to expire Dec. 21.
MAI Basic owns 4.1 percent of Prime's 48.5 million shares outstanding.