The New York Times - December 1, 1981 -- Gould Inc., which tried unsuccessfully to acquire two semiconductor companies in 1979, announced yesterday that it would buy American Microsystems Inc., a leading manufacturer of customized integrated circuits, in a transaction valued at roughly $200 million.
Under the terms of the agreement, Gould will issue 1.78 shares of its common stock for each share of A.M.I. common and preferred stock and for the shares reserved for previously granted employee stock options and warrants.
Based on Gould's closing price yesterday of 24 1/8 on the New York Exchange, which was down 7/8, the transaction would be worth $218.5 million or $42.94 a share of A.M.I. stock. A.M.I. stock, traded over the counter, shot up to 37 3/4 bid, from last week's close of 26 5/8 bid. Trading in the stock had been halted last Wednesday and Friday pending yesterday's announcement.
The acquisition of a semiconductor company could strengthen Gould's effort to change itself from a maker of electrical equipment and automobile batteries to an electronics company.
"It is important to us in our electronics strategy to have the capability to improve our products by the design of custom integrated circuits," Gould's chairman and chief executive officer, William T. Ylvisaker, said in an interview.
Since 1977 Gould, based near Chicago, has bought several small electronics companies and has sold off some of its other operations. In the first nine months of 1981, electronics accounted for 47 percent of the company's sales and 69 percent of earnings.
But Gould failed in 1979 in unfriendly attempts to acquire the Fairchild Camera and Instrument Corporation and the Mostek Corporation, both leading semiconductor companies. To fight off Gould, Fairchild was acquired by Schlumberger Ltd. and Mostek by the United Technologies Corporation.
Other technology companies like General Electric and Westinghouse Electric have also acquired or invested in semiconductor companies, because they are a key component of many advanced technological devices and of factory automation systems. The semiconductor companies have benefited from the capital resources of the larger companies.
While the latest acquisition, which was described by both parties as a friendly one, might help Gould in the long term, they noted its short-term effects would be detrimental. Gould said the acquisition, which would be accounted for by a pooling of interest, would dilute its earnings by 10 percent.
American Microsystems is the veteran in making circuits customized for each customer, in contrast to the practice of most of the larger semiconductor companies of making standard parts that many customers can use.
Customized circuits have been a small part of the overall semiconductor business. But now customized and semi-customized chips are growing faster than standard chips and new start-up companies, as well as some of the established semiconductor companies, are getting into the business.
American Microsystems Inc.'s net income in the first nine months of 1981 rose to $5.8 million, or $1.34 a share, compared with $2.8 million, or 68 cents a share, in the same 1980 period. While much of that increase results from a nonrecurring gain, Thomas L. Humphrey, A.M.I. director of corporate planning and investor relations, said earnings would still have exceeded $1 a share without the one-time item.
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