Hostile takeovers in the healthcare industry are rare, but Harvard graduate A. Malachi Mixon III apparently doesn't read history.
Mixon, chairman and chief executive officer of Invacare, an Elyria, Ohio-based home-care equipment maker and distributor, is leading the charge to acquire Healthdyne Technologies, a home-care medical device manufacturer based in Marietta, Ga.
"Healthdyne makes 80% of what Invacare doesn't. The purchase will help Invacare to truly become a one-stop-shopping home-care company," the 56-year-old Mixon said.
Invacare, with annual revenues of nearly $700 million last year, has been attempting to buy Healthdyne since January. It has upped its offer three times, from $12 per share to the current offer of $13.50 per share, or about $174 million.
Industry analysts believe Healthdyne's stock is undervalued. They say Invacare should be offering to pay about $17 per share for the company.
Invacare is playing hardball with Healthdyne's management. The company already holds 22% of Healthdyne's stock, and it's pushing to replace Healthdyne's seven-member board of directors with members receptive to Invacare's advances.
To fight the hostile takeover attempt, Healthdyne is lobbying the Georgia Legislature to amend state corporation laws that require boards to be replaced as a whole. Healthdyne wants the Legislature to allow boards to be replaced on a staggered basis. That change would bar Invacare from dumping Healthdyne's entire board.
"Your unsuccessful attempt to hide behind the skirts of the Georgia Legislation was clever but ill-conceived, resulting in tremendous and wasteful expense on both sides," Mixon wrote in a letter to Healthdyne Chairman Parker H. Petit.
Mixon also accused Healthdyne's board of postponing its 1997 annual meeting, which is usually held in April or May, to block a shareholder vote on Invacare's proxy proposal.
Invacare filed a shareholder lawsuit in federal court to require Healthdyne to hold its shareholders meeting by June 30.
Petit said Invacare wanted a meeting by June 30 because Healthdyne's latest earnings report wouldn't be out by that time. The upbeat second-quarter report is expected to show the company is worth more than Invacare wants to pay.
Healthdyne posted record revenues of $35.7 million in the first quarter ended March 31.
Last week, Invacare dropped its suit, and the two companies agreed to a July 30 shareholders meeting.
Under the settlement, Healthdyne can postpone the meeting if Invacare changes either its offer price or the structure of its offer.
Invacare's current offer of $13.50 per share expires on May 28.