IRVINE, Calif. -- AST Research Inc. said Wednesday it has signed a letter of intent to acquire Tandy Corp.'s personal computer manufacturing operations at a price not to exceed $175 million to be paid in cash and promissory notes.
Both stocks were up on the news. AST, traded over the counter, was up 12.5 cents, to $15.25, at midmorning. Tandy was up $1.25, to 30.375, in midmorning trading on the New York Stock Exchange.
Tandy assets to be purchased by AST will include GRiD, Tandy-GRiD Europe and computer manufacturing plants in Texas and Scotland.
Tandy/GRiD Systems was the nation's seventh largest personal computer vendor in 1992, with a market share of 3.4 percent, while AST ranked eighth, with a U.S. market share of 2.8 percent,
'We are pleased to announce the proposed acquisition of Tandy's personal computer operations,' said AST President and Chief Executive Officer Safi Qureshey. 'Tandy's strength in multimedia and pen-based technology strongly complements AST's existing product line-up.
'The additional manufacturing capacity and purchasing leverage this transaction brings is important as AST continues to execute its market share capture strategy.'
A definitive purchase agreement still to be worked out by AST and Tandy will detail the specific assets to be purchased and the liabilities to be assumed. The acquisition will exclude accounts receivable.
AST and Tandy estimate the purchase price will not exceed $175 million -- to be paid in either cash or a combination of cash and three- year promissory notes.
AST said it anticipates that, after review of the assets to be purchased and liabilities to be assumed, a significant portion of the purchase price will be paid in the form of three-year promissory notes. Completion of the acquisition remains subject to a number of conditions, including regulatory approvals, approval by the boards of directors of both Tandy and AST and execution of a definitive purchase agreement.
Spokesman for both companies, however, said they expect the deal to close in July.
AST Research is a leading producer of desktop, file server and notebook computers. Headquartered in Irvine, AST is represented in 100 countries and operates 35 international subsidiaries and sales offices.