Wrinkles Ironed Out in Deal Between Access Beyond, Hayes

Wrinkles Ironed Out in Deal Between Access Beyond, Hayes

By Bob Starzynski
Staff Writer

Interest in the proposed merger between Access Beyond Inc. and Hayes Microcomputer Products Inc. was rekindled earlier this month, when the companies finally named the new management structure of the combined company.

The two computer communication manufacturers originally announced their merger on July 30 and said that Joseph Formichelli, who was president and chief executive officer of Hayes, would carry the same titles with the new company, Hayes Communications Inc. Two months later, Formichelli left the post, citing personal reasons, and put the future of the merger up in the air.

On Nov. 12, the companies issued their solution by naming Ron Howard, current chairman and CEO of Gaithersburg, Md.-based Access Beyond, as CEO and vice chairman of the combined company. Howard originally was slated for the vice chairman position but was not to take an executive role.

Due to Securities and Exchange Commission regulations governing such mergers, officials at both companies are in a "quiet period" and could not be reached for comment. However, one company insider at Access Beyond said that the appointment showed investors that "the deal is for real."

The day before the Nov. 12 announcement, Access Beyond's stock jumped 23 percent on the Nasdaq National Market. The stock price had fluctuated significantly prior to the announcement due to uncertainties in the modem market and with the merger deal, the company source said.

The marriage between Hayes and Access Beyond is one of need, according to industry analysts. Hayes, based in Norcross, Ga., is a private company that was the most cutting-edge and popular modem manufacturer not more than 10 years ago. Now 3Com Corp. in Santa Clara, Calif., is the industry giant.

"3Com runs that industry, plain and simple," said Christopher Stix, an analyst with Cowen & Co. in Boston. "They have a majority of the market share." When asked if there is room in the industry for smaller players, Stix responded, "Not really."

Stix said that such smaller players, like Hayes, should diversify into new niches. Which is where Access Beyond comes in.

Access Beyond is the recent descendant of Penril DataComm Networks. One year ago, Penril sold off much of its data communications business to Bay Networks, also of Santa Clara, and spun the rest off as Access Beyond. The company, a maker of remote access computer networking equipment, faces stiff competition from such companies as Bay Networks and Cisco Systems of San Jose, Calif.

So, with Access Beyond and Hayes joining forces, the new company can focus on selling Access Beyond's technology through Hayes' brand recognition. In trying to fill its coffers with cash, the soon-to-be company already has a deal to bring in $45 million through a private stock placement. Access Beyond closed on $10 million of that money on Nov. 12. The rest is due when the merger takes place.

The merger, although still pending SEC approval, is scheduled to close by years end. The combined company, to be based in Atlanta, will come under Access Beyond's public-company umbrella. The company will still maintain offices in Gaithersburg. Access Beyond will issue 45 million shares for all of Hayes. Hayes shareholders will own 79 percent of the company, with Access Beyond shareholders owning the rest. The combined company will have annual revenue of about $277 million this year.

When Formichelli left his position at Hayes, he said that he wanted to have more personal time (he is recently married) but agreed to stay with the company through the merger as a consultant.
P.K. Chan, formerly vice president of operations for Hayes, succeeded Formichelli and will become
president and chief operating officer of Hayes Communications. Dennis Hayes, founder and chairman of the modem maker, will continue as chairman of the new company.

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