Privately held modem producer Hayes
today announced a merger agreement with remote
access player Access Beyond (ACCB)
and a $30 million private placement by an unnamed Asian investor.
The merger with Access Beyond will allow the company to go public under a
new name. Under terms of the deal, the merged company will be renamed Hayes
Communications and its stock will continue to be traded on the Nasdaq exchange. Access Beyond
shareholders will own about 21 percent of the company, and Access Beyond will
issue about 45 million shares of stock for all outstanding shares of Hayes.
The combined company is projected to have a market capitalization of nearly
The merger is expected to be completed by the end of the year.
The $30 million private placement will likely close in September;
Hayes will use the investment to reduce debt and as well as grow the
business, said Dennis Hayes, founder of Hayes Microcomputer. He said
the unnamed Asian investor had been interested in investing in the
company before, but the $30 million will be his first actual stake.
Hayes explained the private placement as such: "If you are growing the business, you need money."
Hayes said the merger is an opportunity to create synergies and reduce
costs. He could not rule out possible layoffs, noting that it was too
early to determine which areas may be cut back. "One of the things that
investors will be looking for are some expense reductions," he said.
Hayes explained three main benefits of the merger. The new company should
be able to coordinate the activities of new-generation products which will
allow for improved margins, offering a "strong potential for increasing
shareholder value," creating market acceptance for Access Beyond's products,
and bringing Hayes into the public realm.
As recently as last month, there was talk that Hayes was interested in a
merger with Micronics Computers. Regarding the break-off of those talks, Dennis Hayes said his company never signed an agreement with Micronics, but could not comment further on when the talks were actually halted. Micronics could not be reached for comment.
Hayes officials have said that going public would offer the company the
opportunity to purchase rival modem makers to expand its business. The No.
2 modem maker's move to merge with a publicly traded entity is known on
Wall Street as a reverse buyout, in which a company goes public by merging
with another company whose shares are already publicly traded.
Dennis Hayes will become chairman of Hayes Communications. Access Beyond CEO Ron Howard will become vice chairman and executive vice president of business development at the new company. Current Hayes president and CEO Joseph Formichelli will continue in the same roles with the merged firm.