Advanced Digital Offers To Buy Overland Storage Shares
DOW JONES NEWSWIRES
October 11, 2005 9:24 a.m.
WASHINGTON (Dow Jones)--Advanced Digital Information Corp. (ADIC) on Tuesday said it sent a letter to Overland Storage Inc. (OVRL) offering to acquire all of the company's outstanding shares for $7.90 each in cash.
According to a Schedule 13D filed with the Securities and Exchange Commission, Advanced Digital holds a 9.28% stake in Overland Storage, with beneficial ownership of 1,303,842 common shares.
In the letter sent Tuesday to Overland Storage's Chief Executive Christopher Calisi, Advanced Digital said its offer price would represent an 18% premium to Overland Storage's unaffected share price of $6.69 a share, which was the closing price of the stock prior to the date at which Advanced Digital indicated that it had acquired a significant stake in the company.
The offer price also would represent an 85% premium to Overland Storage's unaffected enterprise value, based on the company's expected cash balance as described in the company's earnings call Aug. 15, the letter said.
Advanced Digital said its offer price assumes that a transaction would be negotiated on a friendly basis, and that Overland Storage doesn't in the interim implement additional change-in-control protections for management or otherwise materially alter its business, including agreeing to unusual customer provisions. The proposal is conditioned on the completion of confirmatory due diligence and the execution of a customary acquisition agreement.
Advanced Digital said it believes that a negotiated agreement will increase its ability to successfully integrate the two organizations, which would translate into superior value for both groups of shareholders.
The company said it's fully prepared to dedicate all resources necessary to move quickly and to meet with the company and its board. Advanced Digital also said it has retained Deutsche Bank and Wachtell, Lipton, Rosen & Katz to assist in the transaction.
In the letter, Advanced Digital requests that Overland Storage refrain from implementing any additional antitakeover defenses. It also said it currently intends to vote its 9.28% interest in Overland Storage against the board's proposal to increase its authorized common stock.
Shares of Overland Storage, which supplies data storage and storage automation systems, closed Monday at $7.69 each.
Shares of Advanced Digital Information closed at $9.47 each. |
