Vision Center of Global Intrigue
By ANDREW SIMONS
Last year, tiny Irvine-based Vision Solutions Inc. was the center of a takeover battle that spanned three countries and two continents. It may be in for more global drama this year.
It all depends on whether Toronto software maker DataMirror Corp.,which failed in its hostile bid for Vision’s South African parent company last year,will make another play for Idion Technology Holdings Ltd. this July.
Johannesburg Stock Exchange rules limit companies to one hostile takeover bid a year. Idion is listed on the exchange and is based in Sunninghill, a technology-heavy area near Johannesburg.
The prospect of another takeover bid led Vision executives last month to ante up millions of dollars from their own pockets to buy Idion shares. They say they own 47% of Idion’s outstanding shares.
While that’s not enough to block a takeover, Idion officials say they have support from swing shareholders.
“The DataMirror episode is gone from our lives,” predicted Nicholaas Vlok, chief executive of both Vision Solutions and Idion who splits his time between Irvine and South Africa.
DataMirror isn’t ruling anything out.
“It’s a wait-and-see attitude right now,” said Nigel Stokes, DataMirror’s chief executive. “We’d like to see how the business conditions look in July.”
There are compelling reasons for a combination, Stokes said. Both DataMirror and Vision make a kind of software that helps corporate technology workers manage the way data is handled on network.
Sure, the two compete in some areas. But a combined company could cross sell products, Stokes said. Specifically, DataMirror thinks its software that helps to integrate computer systems on a single corporate network would work well with Vision’s offerings.
“We don’t think those areas compete,” Stokes said. “It’s really just about their customers.”
But Idion executives say no dice.
“The only thing synergistic about this merger is for them,” said David Wegman, Vision’s executive vice president.
DataMirror simply wants to get Vision’s customers, he argues.
“One-way synergy doesn’t work,” Wegman said.
Besides, DataMirror hasn’t offered a good price for Idion, Vision officials contend.
Last year, Idion balked at DataMirror’s proposed takeover price of $9.8 million. Officials called it undervalued, though it was a premium to Idion’s shares at the time.
DataMirror made three offers for Idion before it was defeated last July.
Idion bought Vision in 2000 for about $63 million, beating out a smaller competing offer from DataMirror.
The Idion buy caused its own share of family trouble between then 27-year-old Vlok and his father, Marius Vlok, an Idion director.
After publicly questioning what Idion was paying for Vision, Marius Vlok resigned, quarreling with his son over whether their company should buy Vision at all. The younger Vlok steadfastly defended the move.
“The stock dove down to an extremely low level,” Vision’s Wegman said. “DataMirror said we’re going to buy some shares for next to nothing and take advantage of it.”
DataMirror grew its Idion stake to 15% by 2001, and then to 38% by the middle of 2002 when it made its takeover bid.
“I think it’s interesting that they wanted to invest in a competitor rather than in their own technology,” Nicholaas Vlok said.
Vision executives say they’re confident DataMirror won’t get a majority of Idion’s stock. That’s partly because the company’s shares are tightly controlled.
As it stands now, there only are 4% of Idion’s shares that aren’t held by major shareholders. The other owners include South African investment firms VenFin Ltd. at 6% and Metropolitan Asset Managers at 4%. Lehman Brothers Holdings Inc. holds a 1% stake.
“VenFin and Metropolitan have expressed their confidence in us,” Wegman said.
DataMirror slowly has been buying Idion shares for the past year, readying for a possible second run at the company.
The way DataMirror’s Stokes sees it, any takeover bid will hinge on whether Vision will be able to please its big shareholders by boosting sales in a tough economy. Vision is slated to give an update in July.
If the results aren’t encouraging, Stokes said he believes some stockholders will become less possessive of their shares.
“Ultimately, shareholders will act in their best interest,” he said.
So far, things have been good at Vision.
Sales for 2002 were $29.5 million, up 17% from a year earlier, according to the company. Earnings before interest, taxes, depreciation and amortization were $3.9 million. The company called that “a significant improvement over 2001” but didn’t provide a figure for the year-ago period.
Large blocks of Idion shares have changed hands in the last year. Commercial Financial Corp., another South African investment firm, sold its stake. Metropolitan also lowered its stake. Both Data Mirror and Idion upped theirs.
Dillie Malherbe, chief executive of VenFin, told South Africa’s MoneyWeb Internet news site that he’s spoken with both Idion and DataMirror.
Meanwhile, Stokes said DataMirror would sell at the “right” price.
The fate of Marius Vlok’s 1% stake in Idion sparked a court battle last year. The elder Vlok handed his shares to his broker with orders to “dematerialize” them,getting rid of physical stock certificates and replacing them with virtual ones.
The broker apparently misunderstood and sold the stock, which likely was snapped up by DataMirror, according to Vision executives.
Marius Volk said he never had any intention of selling,least of all to DataMirror. The issue now is being fought out in a South African court.
