Proxicom to Compaq: Pay up
Compaq is going to have to put its hand deep into its wallet if it wants to lure hard-to-get Proxicom
Internet services company Proxicom has told potential acquirer Compaq Computer to up its bid or it will take another offer.
Proxicom said Monday that it had received an offer of $7.50 per share, or about $347m, from Dimension Data Holdings, a South African tech company. That offer constitutes a "superior proposal" to Compaq's $266m offer, which valued Proxicom at $5.75 per share.
If Compaq doesn't make a more favorable offer by 5pm ET on 14 May, Proxicom will take the Dimension Data offer, officials said. In that case, Compaq will be entitled to a $10 million termination fee.
Compaq said Monday that "the merger agreement between Compaq and Proxicom continues in effect". Officials could not be immediately reached for comment Thursday. Analysts said that it's unlikely that Compaq would raise its bid for Proxicom.
The Dimension offer was made public Monday, a week after Compaq made its bid for Proxicom.
The bidding war came as somewhat of a surprise to industry watchers. The services industry has been rocked by bad news and tough economic times. Proxicom's stock had hit a new low recently, and the company last week reported a loss of 13 cents a share, in line with reduced estimates. Other consulting firms such as Razorfish, IXL Enterprises and Viant have struggled as well.
The news had sent Proxicom's shares up, but they stumbled a bit in premarket trading Thursday, falling 3 cents to $7.50 on the Island ECN.
Compaq was hoping to expand its services offering with the Proxicom purchase. Proxicom designs business-to-business e-commerce sites and offers support for, among other things, application development and network design.
Dimension Data, based in South Africa, designs computer and communications networks and provides customer relationship-management and procurement software.
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