CompuCom Goes Platinum in $254 Million Deal

An affiliate of a global acquisitions firm, Platinum Equity, LLC, has agreed to purchase a controlling interest in CompuCom Systems. Safeguard Scientifics, which has a 58 percent voting interest in CompuCom, has agreed to vote for the acquisition.

The Platinum Equity affiliate will acquire CompuCom for US$4.60 per common share in cash. In addition, it will acquire Safeguard’s holdings of CompuCom preferred shares for $15 million, plus accumulated dividends. The all-cash transaction is valued at about $254 million, including the payment of $15 million.

Once all conditions of the acquisition are complete, Safeguard will receive approximately $128 million in cash for its CompuCom shares.

Change of Direction

Established in 1987, Dallas, Texas-based CompuCom provides products and services to help companies plan, implement and manage heterogeneous computing environments. As such, the company assists its clients in reducing the costs, complexities and risks associated with information systems and their management. It has operational and service centers scattered across the United States.

Meanwhile, Safeguard acquires and provides hands-on management for early-stage businesses. The company seeks to create long-term value by taking controlling interests in such businesses. In the past, Safeguard has concentrated on broader vertical markets, including financial services, healthcare and pharmaceutical, manufacturing, retail and distribution, and telecommunications.

However, Safeguard president and CEO Anthony Craig said in a Web conference call Tuesday that the company has been reviewing its strategy and that its evolving business model centers primarily on business decision solutions and healthcare life sciences businesses early in their value-creation cycle.

Since it first invested in CompuCom in 1984, Safeguard has pumped $67 million into the firm, he noted.

No Longer Early-Stage

Janine Dusossoit, vice president of investor relations at Safeguard, told CRM Buyer that in 2001, with the arrival of Craig as the new president and CEO, management slowly refocused and refined the company’s strategic direction.

CompuCom has grown into a successful company with a mature market position and so was divested, she said.

The buyer, Los Angeles-based Platinum Equity, is a private equity firm founded in 1995. Since then, it has completed more than 40 transactions and built a portfolio of 18 companies with a total of more than 32,000 employees, 600,000 customer sites and revenues approaching $5.5 billion. In 2003, Forbes magazine named it the 34th largest private company in the United States.

Contingent on Financing

The CompuCom sale is contingent on Platinum Equity’s ability to obtain $35 million in debt financing, the companies said during Tuesday’s Webcast. The debt financing is being arranged by investment bank Jefferies & Co., which has said it is confident about the outcome.

According to Dusossoit, Safeguard has divested some other non-strategic companies in the past three years as it chose to hone in on business decision solutions and healthcare life sciences. Last year, for example, the firm disposed of several companies not matching its strategy, including Verticalnet, Pac West Telecomm, Internet Capital Group, DocuCorp International and Kanbay International.

Some of the companies remaining in the Safeguard portfolio are Alliance Consulting, Pacific Title and Arts Studio, ProModel Solutions, NexTone Communications, eMerge Interactive and ChromaVision.

As part of the latest transaction, Platinum Equity, Safeguard and CompuCom are gathering information to prepare proxy statements for the U.S. Securities and Exchange Commission. Once those statements are available, they will be mailed to CompuCom shareholders, who will vote on the acquisition as soon as possible, probably during the third quarter.

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