Ditech Networks, the Fremont telecom equipment provider that Wall Street values about 40 percent below the amount of cash and short-term investments on its balance sheet, was asked to consider an offer to buy the company for about $32.8 million, or $1.25 a share, 28 percent higher than the stock’s closing price the day before the offer was made public.
Ditech, which has racked up $195 million in cumulative losses during its lifetime, reported having $45.7 million in cash and short-term investments as of the end of its fiscal 2009 second quarter on Oct. 31. The company went public in 1999
The offer was communicated in a roundabout way Wednesday in a letter sent to Ditech by Tim Leehealy, manager of Lamassu Holdings, which acquired about 2.4 million shares of Ditech from October to November, paying on average 76 cents per share, and making it the company’s third largest shareholder at 9.1 percent.
The proposed buyer is AccessData, a Utah-based provider of digital sleuthing technology used by law enforcement, government agencies and corporations to conduct computer investigations. However, because Lamassu, which owns about 10 percent of Ditech, is also an investor in AccessData, a formal offer by AccessData would trigger Ditech’s poison pill, designed to fend off unsolicited takeover offers.
“After reviewing the failure of nearly every major effort to diversify the company,” wrote Leehealy, “it does not surprise me that the current valuation is significantly below the net cash of the company.”
Leehealy closed his letter by asking to meet with Ditech’s board in person or by phone “in the immediate future” to discuss the offer. “Based on last quarter’s results it appears the company is losing nearly $400,000 per week, so clearly time is of the essence.”
Ditech went through two rounds of layoffs last year in an effort to pare its operating expenses.
In a separate filing Thursday, Ditech’s board acknowledged receiving Lamassu’s letter and assured investors it “will consider this proposal in accordance with its fiduciary duties.”