Intergraph Sold
Private investment firms make $1.3 billion deal
Intergraph Corp. said Thursday that it will be sold to a private investment group for $1.3 billion.
The move would take private one of Huntsville's longtime publicly traded companies.
Under terms of an agreement, Intergraph will become a wholly owned subsidiary of Cobalt Holding Co., a Delaware corporation owned by Hellman & Friedman LLC and Texas Pacific Group, both private investment firms based in San Francisco.
Intergraph stockholders will receive $44 cash for each share of Intergraph common stock, a 22 percent premium over the software developer's average closing share price for the past 20 trading days.
Shares closed Thursday at $37.36, up 6 cents.
Intergraph CEO Halsey Wise called the sale a "growth and build story." He said the deal will give the company "greater financial flexibility in a private market to accelerate growth."
"The groups with whom we are now partnered have tremendous capital resources and technical expertise in building large-scale corporations," Wise said. "They have similar commitments to the future that our people do."
Wise said he doesn't expect any changes in upper management as a result of the sale. He also said he doesn't expect any job cuts locally.
"Huntsville is a key part of our heritage and will be a key part of our future," he said.
Intergraph's board approved the sale, which still must be approved by shareholders.
"We are pleased to announce this transaction, which represents the culmination of a thorough review of our standalone plan and strategic alternatives," Intergraph Chairman Sid McDonald said in a news release. He said the board "believes this transaction is in the best interest of our stockholders and underscores the significant operational and financial improvement Intergraph has made over the past three years."
Last year, the company streamlined from four divisions to two: Security, Government & Infrastructure and Process, Power & Marine. The restructuring, which claimed 375 jobs companywide, is expected to save Intergraph about $32 million a year.
1,800 workers locally
Intergraph now has about 3,400 employees, including 1,800 in Huntsville. The company reported a profit last year of $114.4 million on revenue of $576.8 million.
In 1969, Huntsville IBM employee Jim Meadlock and his wife, Nancy, founded M&S Computing, a business that eventually became Intergraph. The company went public in 1981.
Intergraph made computer workstations at first then moved into software development. The company's patent enforcement efforts began with its 1997 filing of a patent infringement and unfair business practices lawsuit against Intel. The fight left the company without access to major developments in chip technology, ultimately forcing it to cut jobs and exit the computer hardware business in 2000.
During the past several years, Intergraph has collected $864 million in settlements and judgments against major technology companies, including Intel, Hewlett-Packard and Gateway. The disputes stem from use of Intergraph's Clipper patents and its parallel instruction computing, or PIC, patents.
3 patent suits pending
The company currently has suits against Fujitsu-Siemens Computers, NEC and Toshiba.
Meadlock retired from the company in 2000. Wise joined the company as CEO in 2003 after Jim Taylor retired.
During the past 52 weeks, Intergraph shares, traded on the Nasdaq, have ranged from $30.04 to $51.77.
Wise said he expects the sale to close by year's end.
Don Nalley, president and CEO of Beason & Nalley PC Business Consulting Group, said going private is probably a good move for Intergraph.
"The flexibility you're allowed by being private is much greater than being public," Nalley said. "You've got these expectations out there, and you're supposed to make these targets. ... You're under the spotlight.
"They will have to report to investors, but it will be much more private."
Intergraph's direct U.S. competitors, Bentley Systems and Environmental Systems Research Institute, are both privately held.
Other Huntsville-based public companies include Adtran Inc., Avocent Corp. and Wolverine Tube Co. SCI Systems Inc., formerly a Huntsville-based public company, was bought by San Jose, Calif.-based Sanmina Corp. in 2001, becoming Sanmina-SCI. Huntsville-based Verilink Corp. was purchased by Verso Technologies Inc. of Atlanta in July.
What: Huntsville-based Intergraph is sold to a private investment group for $1.3 billion.
For shareholders: Holders of Intergraph stock shares will receive $44 cash for each share of Intergraph common stock, a 22 percent premium over the software developer's average closing share price for the past 20 trading days. Shares closed Thursday at $37.36.
For employees: Intergraph CEO Halsey Wise said he doesn't expect any changes in upper management as a result of the sale. He also said no reductions in Huntsville employment are expected.
In the past: Huntsville IBM employee Jim Meadlock and his wife, Nancy, founded M&S Computing in 1969, a business that would eventually become Intergraph. The company went public in 1981.
What's ahead: Intergraph's board of directors approved the acquisition, which still must be approved by shareholders. The deal is expected to close within the next three or four months.
Quote: "Huntsville is a key part of our heritage and will be a key part of our future.'' - Halsey Wise, Intergraph's CEO.