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CompUSA Inc. Completes Acquisition of Tandy's Computer City Subsidiary
PR Newswire - September 01, 1998 07:50
DALLAS, Sept. 1 /PRNewswire/ -- CompUSA Inc. (NYSE: CPU) announced today the completion of its acquisition of Tandy's (NYSE: TAN) Computer City subsidiary. The Company announced its definitive agreement to purchase Computer City in June 1998.
The purchase price of the transaction is approximately $211 million, payable in a note and cash. The sale will be accounted for under the purchase accounting method.
"We are very pleased with our acquisition of Computer City, which we believe will further CompUSA's position as the nation's premier provider of personal computer-related products and services," said James F. Halpin, CompUSA president and chief executive officer.
Mr. Halpin added, "We are excited about the many opportunities this acquisition will offer CompUSA and about the potential benefits to our customers, shareholders and team members. I would like to thank the many CompUSA and Tandy employees whose hard work and dedication enabled us to finalize this transaction so quickly."
Credit Suisse First Boston served as financial advisor to CompUSA in connection with the transaction.
CompUSA is one of the nation's leading retailers and resellers of personal computers and related products and services. Not including its newly acquired stores, the Company currently operates 164 CompUSA Computer Superstores(SM) in 73 major metropolitan areas across the United States which serve retail, corporate, government and education customers and include technical service departments and classroom training facilities. CompUSA also offers its own build-to-order line of personal computers, the CompUSA PC(TM), and operates an Internet web site located at www.compusa.com.
This news release contains forward-looking statements about the business, financial condition, and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including without limitation, changes in product demand, the availability of products, changes in competition, economic conditions, various inventory risks due to changes in market conditions and other risks indicated in the Company's Securities and Exchange Commission filings and reports. All of the foregoing risks and uncertainties are beyond the ability of the Company to control, and in many cases the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward- looking statements. When used in this news release, the words "believes," "anticipates" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.
CompUSA Inc. Completes Acquisition of Tandy's Computer City Subsidiary Q&A
1) How many stores will be closed as a result of the acquisition?
Fifty Computer City stores will be closed after the inventory
liquidation. (See attached list of stores to be closed.) The remaining
44 U.S. Computer City stores and seven Canadian Computer City stores will
continue to operate.
2) What will happen to the inventory in the closed stores?
The Company has entered into an agreement with a liquidator to sell the
inventory in all closed stores. Liquidation sales will begin immediately
at these locations.
3) What will happen to the leases of the closed stores?
The Company is actively marketing these sites and is in discussions
with various parties to sublease or assign the closed store facilities.
4) Will the Computer City stores that remain open be converted to the
CompUSA name and format? If so, what is the timeline for converting
the stores?
CompUSA plans to implement its business processes, information systems
and merchandise assortment in the next 60 - 90 days. In addition, the
Company plans to change the exterior signage on these stores to CompUSA as
soon as possible.
5) What will happen to Computer City's store personnel and home office
staff?
At the store level, certain employees will be transferred to existing
CompUSA stores immediately and all other employees will be offered
positions to assist with the liquidation sales. Subsequent to the
liquidation sales, CompUSA will evaluate the remaining store staff and
many employees will be offered positions. CompUSA has already offered
positions to all Computer City general managers.
CompUSA plans to combine corporate headquarter staffs over the next
six months. While the Company expects to attain significant synergies
with this acquisition, many Computer City employees will be offered
positions at CompUSA's corporate office. However, approximately 150
positions at the Computer City corporate headquarters have been eliminated
as of today.
6) What are the terms of the note payable to Tandy?
The note payable to Tandy is in the amount of $136 million, bears an
interest rate of 9.48% and is payable in 10 years. The first three years
are interest only, with the first principal payment due in December 2001.
7) When you announced your definitive agreement to purchase Computer City,
the estimated purchase price was $275 million. What is the reason for
the significant change in purchase price?
The purchase price is determined by a formula based on book value.
Since CompUSA announced the definitive agreement in June 1998, certain
adjustments were made to the purchase price and, in addition, the book
value declined due to Computer City's operating results and changes in
working capital.
8) Will all product warranties, service commitments, training vouchers,
etc. of Computer City be honored by CompUSA?
All Computer City product warranties, service and training commitments
will be honored by CompUSA. Taking care of customers is a top priority at
CompUSA, and the Company looks forward to serving these new customers.
CompUSA Inc. Completes Acquisition of Tandy's Computer City Subsidiary
No. of Stores
Market Closing
Anchorage 1
Phoenix 1
San Diego 1
SFO Bay Area 3
Colorado Springs 1
Denver 1
Hartford 1
Miami 1
Atlanta 1
Augusta 1
Chicago 5
Kansas City 1
Baton Rouge 1
Boston 1
Washington D.C. 2
Grand Rapids 1
Detroit 1
Minneapolis 3
Newark 1
NYC/NJ 1
Las Vegas 1
Buffalo 1
NYC/NJ 2
Rochester 1
Tulsa 1
Portland 1
Pittsburgh 1
Dallas 1
El Paso 1
Fort Worth/Arlington 2
Houston 2
San Antonio 1
Richmond 1
Washington D.C. 2
Seattle 2
Milwaukee 1
SOURCE CompUSA Inc.
/CONTACT: James E. Skinner, Executive Vice President & CFO, or J. Robert
Gary, Vice President - Finance, 972-982-4000, or Stacie Shirley, Director -
Investor Relations, 972-982-5323, all of CompUSA Inc., or Media Relations
Dept.: 972-982-4181/
/Photo: newscom.com
or NewsCom, 213-237-5431/
/Company News On-Call: prnewswire.com or fax, 800-758-5804,
ext. 804625/
/Web site: compusa.com |
