Story originally printed in the La Crosse Tribune or online at www.lacrossetribune.com

Published - Tuesday, November 15, 2005

Firstlogic sale to Pitney Bowes terminated

By STEVE CAHALAN | La Crosse Tribune

La Crosse-based Firstlogic Inc. said Monday its planned acquisition by Pitney Bowes Inc. of Stam-ford, Conn., has been called off.

The companies had announced an agreement Sept. 1 by which Pitney Bowes would acquire the 90 percent of Firstlogic it does not already own for about $50.3 million. They said the transaction was subject to regulatory approval.

But the Federal Trade Commission had some anti-trust concerns, and requested additional information, Rich Petro, a spokesman for Firstlogic, acknowledged Monday.

After the FTC’s Second Request for Information, “we mutually decided that it was in the best interest of all involved not to proceed further with the acquisition,” Firstlogic President Eric Lieberman said in a press release. “Although we are naturally disappointed in this result, we have also learned a great deal by going through this process that can make us a better company.”

Firstlogic employees did a “great job” of keeping focused, he said.

When the FTC issued a second request, the two companies faced the prospect of spending a lot of time and money responding, without knowing the final outcome, said Petro, Firstlogic vice president of human resources, in an interview Monday.

“It’s not entirely clear how deep and how big those concerns were,” he said.

When asked, Petro said he assumes other companies will express interest in acquiring Firstlogic in the coming years, as has happened in the past several years. “When there’s some good mutual synergy, perhaps we’ll proceed,” he said.

It’s business as usual at Firstlogic, Petro said. He estimated Firstlogic has added 10 to 15 positions since the Sept. 1 announcement, and that most of those positions are in La Crosse. “We have plans for adding people and adding products and selling more software in 2006,” Petro said.

A Pitney Bowes spokesman declined comment, but the company said in a regulatory filing Monday that the acquisition is off.

“The most important thing is that Firstlogic was a fine, competitive company before, is now, and will be in the future,” said James Hill, executive director of the La Crosse Area Development Corp.

“I don’t know that I would classify (Monday’s announcement) as good or bad,” said Dick Granchalek, president of the La Crosse Area Chamber of Commerce.

The FTC frequently issues a Second Request for Information, said James C. Naleid, managing director with Naleid & Associates, a La Crosse financial and business consulting firm. “Particularly when the two contemplating a merger may have a monopoly-like position on whatever product or service they may provide.”

Naleid said it also isn’t uncommon for companies to abandon acquisition plans when they assess the costs associated with trying to satisfy the FTC. “That cost isn’t always just in dollars,” he said. “It’s in time, energy and, oftentimes, one or the other of the participating parties have to divest themselves of assets that they may not necessarily want to divest.”

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