Why is PureChoice Inc., a vendor of building-performance reporting software, trying to buy MathStar for around $9.5 million? And why hasn't the defunct programmable logic vendor's board responded?
PureChoice Inc. is a Burnsville, Minn.-based company that describes itself as a leader in building-performance reporting software. Why has the firm been trying to buy defunct programmable logic vendor MathStar Inc.?
Kevin Kuhne, chief operating officer of Purechoice, said his company is interested in MathStar's field programmable object array (FPOA) technology to replace the microprocessors it currently uses in the physical component of its product offering, a sensing appliance known as "The Nose." Kuhne also expressed frustration that MathStar has thus far been unresponsive to any of the three offers Purechoice has made to acquire the company.
PureChoice announced Monday (May 11) an offer to buy MathStar for $1.04 per share. Kuhne said public filings indicate that MathStar has nearly 9.2 million shares outstanding and that the total value of Purechoice's offer works out to between $9 million and $10 million.
PureChoice has previously made two offers to merge with MathStar in stock swap transactions, whereby MathStar shareholders would acquire ownership in
PureChoice, which is a private company. The first offer was made last October, and, according to Kuhne, was followed up by a second, similar offer in December or January. Kuhne said MathStar's board of directors was unresponsive.
"We couldn't even get them to the table to negotiate," Kuhne said. He added that one of MathStar's board members lives in Minnesota and that PureChoice has been unable to persuade him to come into its headquarters to discuss the offers.
Douglas Pihl, MathStar chairman, did not immediately respond to request for comment.
With the latest offer, PureChoice decided to offer all cash to remove the potential for disagreement about valuation, since PureChoice is privately owned, Kuhne said.
PureChoice said Monday when making the offer that it respresneted a 23 percent premium over last week's closing MathStar share price of 84 cents. However, as of Wednesday, MathStar was trading on the Nasdaq OTC for $1.06 per share, according to Nasdaq.com.
MathStar (Hillsboro, Ore.) ceased operations last year after engaging an investment bank to explore strategic alternatives for the company, presumably including an acquisition by another firm. The company's website is still up, and it's still possible to reach the company's switchboard and Pihl's voicemail.
The Nose from PureChoice is described as a multi-sensor platform used in conjunction with building controls systems to allow efficient energy management and a comfortable, productive indoor environment. Kuhne said PureChoice is heavily involved in the "green space" and has the potential to sell hundreds of thousandsif not millionsof units. The company's CEO recently testified on energy efficiency policies before the U.S. Congressional Subcommittee on Energy and Environment.
On Tuesday, Kuhne said PureChoice had thus far received no response from MathStar on the latest offer, though he conceded that his company expected it would take MathStar's board at least a few days to respond, assuming they had interest in discussing the offer. But he said MathStar shareholders have been calling PureChoice to express support for the offer.
"We think it is a significant all cash offer," Kuhne said.