After several years of losses and citing the burden of accounting rules for public companies, an Annapolis security business plans to sell itself to private buyers.
CompuDyne Corp. said yesterday that an investor group made up of Washington-based executive Stuart Mackiernan and California buyout firm The Gores Group would assume its debt and pay $7 per share - roughly $59 million - to acquire the company. The price represents a 32 percent premium over the closing share price of $5.29 on Monday, the day the deal was reached.
The announcement sent CompuDyne's stock up $1.44, or 27 percent, to close at $6.73 yesterday on the Nasdaq.
CompuDyne provides technology security solutions across several sectors, including public safety records management, bulletproof windows to guard against attacks, closed-circuit surveillance systems and sliding-door mechanisms for use in correctional facilities.
The company employs about 800 people in offices throughout the country, including 80 employees in Maryland. It's unclear whether the Maryland offices - in Annapolis, Gaithersburg and Hanover - will remain open, according to the buyers, though their plan is to build the business, they said, not dismantle it.
Mackiernan, who most recently held executive posts with defense company L-3 Communications, will assume the chief executive position at the close of the transaction, expected this month. He replaces Martin Roenigk, who has filled the job since 1995. It's unclear whether Roenigk will have a role in the company after the sale, CompuDyne said.
Mackiernan and his spokesman declined to comment on the transaction, which is expected to move forward next week when a tender offer explaining the details is sent to shareholders.
"This action represents the culmination of a long process of exploring the best direction for CompuDyne to take," Roenigk said in a statement, blaming a complex and expensive decentralized business structure and "the inordinate costs of being a public company in the post-Sarbanes-Oxley era," for the decision to sell.
Signed into law in 2002, the Sarbanes-Oxley Act is considered the most sweeping securities legislation enacted since the Great Depression. It was designed to hold business executives more accountable in the wake of the Enron scandal, and has led to grousing by many public companies unhappy with the added compliance expense - which can run in the millions - and paperwork.
"We've been dealing with these costs for the last few years," CompuDyne Chief Financial Officer Geoffrey F. Feidelberg said in an interview. "It's expensive to be a small public company."
Last year, the business, which was incorporated in 1952, reported a loss of $15 million, up 73 percent from a loss of $8.7 million recorded in 2005. Revenue for 2006 was $147.5 million, up 4 percent from the prior year's $141.7 million. The company reported long-term debt in 2006 of about $42.6 million.
For the quarter that ended June 30, the company reported a profit of $204,000 or 2 cents per share, down 33 percent from the corresponding quarter a year earlier. Revenue for the second quarter was down 7 percent to $35.6 million.
CompuDyne maintains several divisions, including those focused on correctional-facility security, public safety, signal interception and surveillance and attack protection.