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Continued: Schafer: Analysts deal reflects reality for smaller public companies

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: September 7, 2013 - 2:00 PM

If returning the company to profitable growth were easy, Jeff Baker would have done it, rather than leaving the company in early 2007 after a little over a year in the CEO’s job. Or Elmer Baldwin would have, before leaving under pressure in late 2009. Or Andrew Borgstrom, who then gave the CEO job about nine months.

McKinney’s tenure started with an increase in revenue and earnings for 2011, but both slipped in 2012. In the most recent period, the first six months of the 2013, revenue has declined 6.5 percent, to $50.3 million.

And it turns out that the nudge from Heartland was enough for McKinney and the board to seek a buyer.

In a filing made last week recommending that shareholders tender their shares, Analysts explained that in December’s regular board meeting, McKinney went through the list of issues related to the company’s relatively small size. It was covering ground she and her directors had covered before.

This time, though, she also reported that the day before, Heartland in a Securities and Exchange Commission filing had urged them to please find a buyer.

Within weeks the investment banking firm of Cherry Tree & Associates was looking at Analysts’ options, and at the end Analysts’ board settled on American CyberSystems.

At a price of $6.45 per share, when the deal closes it will be far less than the valuation in the 2005 failed merger and a small fraction of the all-time peak valuation reached in early 1998. At a 62 percent premium to the average price over the previous 30 days, however, and given the history of the last decade, perhaps the best way to describe the transaction is with the word Lang used.

The buyout, he said, was “practical.”

lee.schafer@startribune.com • 612-673-4302

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