Meade Instruments Board Urged Shareholders To Reject MIT Capital Offer

By Mani
Updated on

The board of directors of telescope maker Meade Instruments Corp. (NASDAQ:MEAD) asked its shareholders to reject the $3.65 per share cash offer of VictoryOne.

Meade Instruments Corp Logo

VictoryOne Inc is a unit of San Jose venture capital firm MIT Capital Inc. It has proposed to acquire all outstanding shares of Meade Instruments for $3.65 per share in cash.

Gates Cap Management Reduces Risk After Rare Down Year

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More

The board reaffirmed its earlier recommendation to shareholders to vote in favor of a merger deal with Jinghua Optics & Electronics Co. in Guangzhou, through its U.S. subsidiary, JOC North America LLC, which offered cash at $3.45 per share.

The board justified its reasoning in its Friday’s 14D-9 filing with the Securities and Exchange Commission.

Meade Instruments Corp. (NASDAQ:MEAD) is a consumer products company that designs, manufactures, imports, and distributes telescopes, telescope accessories, binoculars, spotting scopes, and other consumer products.

Rationale for Rejecting MIT Offer

The telescope maker’s board termed its agreement with JOC a binding and negotiated commitment for both the companies. Hence, failure to reject the MITC offer and / or failure to reaffirm the deal with JOC would give the latter the ability to terminate the merger agreement immediately.

The board also highlighted various circumstances under which MITC is not required to accept for payment any shares of Meade Instruments Corp. (NASDAQ:MEAD) and hence can terminate its offer before the expiry date of July 19, 2013.

Meade Instruments May Have to Pay Termination Fee

Meade Instruments Corp. (NASDAQ:MEAD)’s board also indicated that in the event of the company recommending the MITC offer, it would be obligated to pay JOC a termination fee of $250,000.

The board of directors of Meade Instruments has clarified that the above circumstances are only illustrative in nature and not exhaustive.

After carefully evaluating variety of factors for considering the MITC offer and the pending merger with JOC, Meade Instruments Corp. (NASDAQ:MEAD)’s board has come to the conclusion that it won’t be practicable and recommends its shareholders reject MITC offer.

The telescope company hasn’t posted a quarterly profit since May 2008. In its latest fiscal year, which ended Feb. 28, the company reported a net loss of $3.7 million.

Subscribe to ValueWalk!

Get updates on the latest posts and more from ValueWalk straight to your inbox.