SafeNet extends deadline for deal

Shareholders favor takeover, firm says

April 10, 2007|By Stacey Hirsh | Stacey Hirsh,Sun reporter

SafeNet Inc., the Harford County technology company embroiled in an options probe that has agreed to be acquired by a California private equity firm, said yesterday that enough shares have been tendered for the deal to go through.

The company also said, however, that it is extending the deadline until tomorrow night to allow for more shares to be tendered. The acquisition requires the tendering of 78 percent of SafeNet's shares.

"The net effect, we expect, would be a higher result than the 78 percent we are at this morning," said Gregg Lampf, director of investor relations.

As of midnight Friday, the original deadline, about 15.3 million SafeNet shares had been tendered, the company said. Shareholders had begun tendering another 1.3 million shares, though that process wasn't complete yet. The new deadline will allow for those shares to be tendered.

The total of 16.6 million shares that were tendered or expected to be tendered by the new deadline make up about 78 percent of SafeNet's approximately 21.3 million outstanding shares - enough for the deal to go through. "In addition to allowing additional shareholders to tender additional shares," Lampf said, extending the deadline "also provides for these guarantees to settle."

The Belcamp encryption technology company put itself up for sale after being roiled by probes into its stock options grants. Last month, it agreed to be acquired by Vector Capital for $28.75 a share, or about $634 million.

Several analysts have said the share price is too low, and lawsuits have been filed on behalf of stockholders alleging the company breached its fiduciary duties to shareholders with the merger. SafeNet reached an "agreement in principle" last week in one of those lawsuits, filed by Tokyo-based Globis Capital Partners, one of SafeNet's largest investors.

The local company still faces an investigation into its stock options and the threat of being delisted by Nasdaq. SafeNet announced last year that it received a federal subpoena for information about stock option awards as well as an informal inquiry from the Securities and Exchange Commission.

SafeNet is one of dozens of companies being investigated for possibly changing the date of option awards to coincide with stock prices that are lower than they were on the date of the grant. The practice is illegal if it's not disclosed and properly accounted for.

For SafeNet, the options issues have led to an internal investigation, the resignation in October of two of the company's top officers and the need to restate years of financial results. If the acquisition by Vector Capital goes through, SafeNet would become private, and the backdating issue would be out of the public eye.

Shares of SafeNet closed yesterday at $28.69, up 21 cents.

stacey.hirsh@baltsun.com

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