Sitestar Withdraws Bid
Sitestar Corp., an Encino-based Internet holding company, said it is withdrawing an unsolicited $22.5-million cash offer for Fashionmall.com Inc. after the online retailer received other higher bids.
Sitestar did not want to raise its bid to level of other suitors, company officials said. In October, Sitestar said it would pay $3 for each of Fashionmall.com’s 7.5 million shares, a 39 percent premium at the time.
New York-based Fashionmall.com last week received two other offers: a $7-per-share cash and stock offer, including $2 a share in cash, from Van Nuys-based GenesisIntermedia.com Inc., and a $3.50-per-share cash offer from Beverly Hills-based Narax Inc.
Fashionmall.com, which sells clothing and accessories online, is unlikely to accept either offer because the cash portion is less than the company’s own per-share cash value. The company, which had sales of $3.68 million in the nine months ended Sept. 30, has posted a loss in every quarter since going public in May 1999.
CPK Selling Shares
California Pizza Kitchen Inc. filed for an offering of 3.4 million common shares, including sales by its co-chairmen and other big shareholders.
The Los Angeles-based company, the owner and franchiser of 112 pizza restaurants, filed with the Securities and Exchange Commission to sell 200,000 shares, raising funds for general corporate purposes. Investors and executives plan to sell the other 3.2 million shares.
Co-Chairman Larry Flax, 58, is selling 351,237 of the shares, worth about $8.7 million, cutting his stake in the company from 8.5 percent to 6.3 percent, the filing said. Richard Rosenfield, 55, the company’s other co-chairman, plans to offer 356,133 shares, which would reap about $8.9 million The transaction would reduce his holdings from 7.9 percent to 5.8 percent.
Bruckmann, Rosser, Sherrill & Co., the company’s top investor with a 25 percent stake, plans to sell about 1.6 million shares, worth approximately $39 million. The Greenwich, Conn.-based firm would retain a 16 percent stake with 2.9 million shares. The investor, which also owns Au Bon Pain Co. and Il Fornaio Corp. restaurant chains, bought a controlling stake in California Pizza Kitchen from PepsiCo Inc. in 1997.
New Buy for Platinum
Los Angeles information technology company Platinum Equity has acquired a voice products business from Lanier Worldwide Inc.
Financial details of the deal were not disclosed, but Platinum officials said they will create a new company, Lanier Healthcare, focusing on the sale, service, support and development of applications related to the technology of transferring speech to text processing.
The company will have an employee base of 500, a customer base of 285,000 physicians and projected sales of $120 million for 2001, Platinum officials said.
The late-year acquisition was Platinum’s seventh of 2000 and Lanier Healthcare is the 18th company in the Platinum technology portfolio. In October, Platinum acquired three companies Billing Concepts, Aptis and Operator Service Co.
Vivendi Sheds Sports Assets
Canal Plus, the pay-TV unit of French media group Vivendi Universal, has confirmed plans to divest its stake in the sports channels Eurosport and Eurosport France and to launch a rival sports channel.
In 2000, Vivendi merged with Seagram Co. and took over Universal Studios, creating a new company, Vivendi Universal.
The French pay TV unit holds a 49.5 percent stake in Eurosport while its French rival channel Television Francaise 1 owns the rest and is considered to be the likely buyer. Eurosport is the biggest European cable sports channel, and claims 30 million subscribers.
Canal Plus also plans to sell its 39 percent stake in Eurosport France, which is the French-language version of Eurosport.
Canal Plus is developing a competing sports channel. Due to an anti-competition clause in the contract between Canal Plus and its Eurosport partners, the new channel cannot be launched for at least a year.
Guilty Plea in Emulex Fraud
A former junior college student who caused Emulex Corp. investors to lose about $110 million in a stock fraud scheme pleaded guilty to federal fraud charges.
Mark Simeon Jakob, 23, of El Segundo, admitted to arranging a fake Internet news release about the Costa Mesa high-tech firm on Aug. 25, prompting a 62 percent drop in the company’s stock price. Jakob took more than $241,000 in profits through the hoax, by trading shares during the stock’s wild price swings.
Sentencing was set for March 26 after Jakob pleaded guilty to two counts of securities fraud and one count of wire fraud. He faces up to 46 months in prison. Jakob also agreed to pay $110 million in restitution. At the pleading, he turned over $54,000 in cash, reportedly proceeds from the hoax.
Jakob said he committed the fraud to recover $97,000 in paper losses he faced through Emulex shares he had “sold short,” betting the stock’s price would drop. To prompt an Emulex price decline, Jakob e-mailed a fake company news release to Internet Wire. The news release stated that Emulex was restating prior profits as losses and that it was under investigation by the Securities Exchange Commission.
The bogus news was picked up by several news outlets, prompting a price dive within minutes as panicked investors sold the stock. Prices for shares in the firm, which makes high-speed data storage products, quickly recovered but millions of dollars were lost by investors who sold low.
Disneyland To Fix Roger Rabbit
A state order requiring Disneyland to overhaul a ride that left a 4-year-old boy with brain damage is raising questions about whether theme-park regulations now being drafted should require safety improvements in similarly designed rides.
The California Division of Occupational Safety and Health has called on Disneyland to add entryway closures and sensor-equipped guards around the base of cars on the Roger Rabbit Car Toon Spin.
The order came three months after preschooler Brandon Zucker fell from the ride and was dragged underneath a spinning simulated taxicab for about 10 feet before the ride stopped. Several other Disneyland rides also contain entryways without doors, but the state has not required that those attractions be modified.
The state is completing new safety regulations for theme parks. The current draft of the rules was written before regulators completed a probe of the Roger Rabbit accident and doesn’t require amusement parks to modify similar rides.
Disneyland officials have disagreed with the division’s finding that the ride’s design was to blame for the accident but said they would overhaul the Roger Rabbit Car Toon Spin. However, Disneyland said, it has no plans to change other rides at the park that also have open entryways and exposed bases.
AOL, Time Warner Wait
America Online Inc. and Time Warner Inc. are not likely to get U.S. regulatory approval of their proposed merger as quickly as they hoped. And both companies may end up having to pay millions of dollars for duplicate paperwork.
AOL had asked the Federal Communications Commission to approve the transaction before Jan. 1, to avoid the burden and expense of filing separate financial documents.
By combining the world’s largest Internet service and the largest media company, AOL Time Warner plans to package more online news and entertainment and develop interactive TV, which lets viewers use their TV sets like computer screens to shop online.
The FCC is the last regulatory hurdle for the companies, which announced plans to combine nearly a year ago. Commissioners are reviewing a staff recommendation on the merger, focusing on whether the new AOL Time Warner would have an unfair advantage in developing and marketing instant messaging because of the popularity of AOL’s service.
FCC approval in 2000 would have helped the companies by reducing the number of state and local tax returns, Securities and Exchange Commission filings and audit and accounting reviews they must submit each quarter.
Manufacturing Down Again
Manufacturing activity fell to its lowest level in nearly a decade, raising further questions about the health of the U.S. economy.
Economists said the December numbers from the National Association of Purchasing Management could have been one factor on the Federal Reserve’s decision last week to cut interest rates.
The NAPM said its purchasing index dropped to 43.7 percent in December, down from the 47.7 percent it reported in November. The December reading was significantly lower than the 47.0 reading analysts had anticipated. A purchasing managers’ index above 50 signifies growth in manufacturing, while a figure below 50 means contraction.
The December figure marks the lowest level since it recorded 42.9 percent in April 1991.
