Investor Group Set to Acquire CompuDyne For $59 Million

CEO Says Sale Prompted In Part by Sarbanes-Oxley

CompuDyne, an Annapolis security firm that provides blast-resistant windows and doors for U.S. embassies and federal buildings, has agreed to be acquired by a group of private-equity investors for about $59 million, the company said yesterday.

The buyers, led by the Gores Group of Los Angeles, are offering $7 a share -- a 32 percent premium over the closing price Monday, when CompuDyne directors agreed to the merger.

CompuDyne chief executive Martin Roenigk said the sale was prompted in part by the cost of abiding by tighter corporate governance requirements under the 2002 Sarbanes-Oxley law.

"It's been a long process," Roenigk said in a conference call with investors. "We've been talking for two years about exploring alternatives. [CompuDyne is] too small and too complicated to effectively and efficiently be a public company especially since . . . being hit by a $4 [million] to $5 million bill for Sarbanes-Oxley."

The buyout announcement came the same day CompuDyne reported a 33 percent drop in second quarter earnings, to $204,000 (2 cents a share) from $305,000 (4 cents) in the comparable period a year earlier. Revenue fell 7 percent, to $35.6 million from $38.4 million.

Roenigk attributed part of the earnings decline to the completion in the year-ago quarter of a large contract to provide vehicle barrier systems and bullet-, blast- and attack-resistant windows and doors to U.S. embassies.

The investors group said that once the transaction was completed it would appoint Stuart Mackiernan, one of its members, as chief executive. Mackiernan has held senior positions at such technology firms as GE Capital Spacenet Services, General Dynamics, SAIC, Unisys and L-3 Communications.

"CompuDyne has a strong franchise and is uniquely positioned in key areas within the homeland security and infrastructure protection markets," said Steven Chang, partner and co-founder of Clearlake Capital, which is providing debt and equity financing to the investor group. "We are excited to partner with Gores and Stuart."

Friedman, Billings, Ramsey Group acted as financial adviser to the Gores investor group. The investment bank, based in Arlington, last December agreed to pay about $7.7 million to the Securities and Exchange Commission and the NASD to settle charges of insider trading stemming from the company's trading of shares in a 2001 securities offering that it managed for CompuDyne.

The company's stock closed yesterday at $6.73 a share, up $1.44, or 27 percent.