Safeguard Scientifics Sees Gain on Sanchez Stake Sale
Dow Jones, Wednesday, January 28, 2004 at 10:54
WAYNE, Pa. (Dow Jones)--Safeguard Scientifics Inc. (SFE) expects a net gain of $31 million on the sale of its 23% stake in
Sanchez Computer Associates Inc. (SCAI), which earlier Wednesday agreed to be acquired by Fidelity National Financial Inc.
(FNF).
Technology company Safeguard said it will record the gain when the transaction closes, which is expected in the second
quarter.
In a press release Wednesday, the company said it owns 6.3 million common shares of Sanchez. It expects to receive about
$40 million from the sale of the stock, and about $4 million from the sale of shares held by former chairman and chief executive
Warren V. Musser pledged as collateral under a loan arrangement between Musser and Safeguard.
Safeguard Scientifics said it agreed to vote its shares of Sanchez in favor of the Fidelity National Financial deal and against any
competing transaction. The company also agreed not to sell its shares of Sanchez until the deal has been completed or
terminated.
In addition, Safeguard granted to Fidelity an option to buy the company's shares of Sanchez at an option price of $6.50 a share
or any higher amount agreed to in an amended merger agreement."We have been a long term supporter and holder of Sanchez
but our strategy directs that we acquire majority interests in our subsidiaries,"Safeguard said."As we could not achieve this
level of ownership in Sanchez, we are pleased to participate in a transaction that allows us to exit one of our non-strategic
companies."Safeguard plans to use proceeds from the stock sale to increase its ownership interest in in its units and fund their
growth plans, and to acquire new subsidiaries. The company may also consider steps to modify its capital structure, which
may include repurchasing part of its convertible notes due in June 2006 or buying back outstanding equity securities.
Last December, Safeguard agreed to sell its stake in Tangram Enterprise Solutions Inc. (TESI) to Opsware Inc. (OPSW). It
expects a gain on the sale of about $5 million, which will be recorded when the deal closes.
As reported, Fidelity National agreed to acquire Sanchez Computer for $6.50 a share, consisting of $3.25 in cash and $3.25 in
stock.
Malvern, Pa.-based Sanchez develops, installs and supports software for the financial services industry.
Fidelity, Jacksonville, Fla., provides products and services to the real estate and financial services industries.
New York Stock Exchange-listed shares of Safeguard Scientific recently traded at $5.50, up 7 cents, or 1.3%.
Fidelity National Financial's stock traded at $41.48, down 25 cents, or 0.6%, also on the Big Board.
Sanchez Computer's shares, which had been halted for trading earlier in the day, recently changed hands at $6.36, up 76
cents, or 13.6%, on Nasdaq.
-Tom Rojas; Dow Jones Newswires; 201-938-5400
(END) Dow Jones Newswires
01-28-04 1054ET
SOURCE Dow Jones
01/28/2004 |
