MBI Business Centers Inc., the Rockville-based computer store chain formerly known as The Math Box Inc., yesterday announced that it has terminated negotiations for a merger with Businessland Inc. of San Jose.
The merger, which would have joined two major computer retail companies in a large nationwide network, was to have been accomplished by a stock swap valued at $75 million when the proposed merger was announced. It fell apart when Businessland attempted to change the terms, according to MBI Chairman Avner Parnes.
Parnes said that Businessland wanted to reduce the number of its shares to be exchanged for each share of MBI. In April, when the deal was announced, MBI shareholders were to receive 1 1/2 shares of Businessland for each of their shares.
"During negotiations of the tentative agreement, information became available to us that indicated that the terms and conditions of the letter of intent needed to be renegotiated," said Suzanne Crocker, spokeswoman for Businessland. Crocker would not say what the information was, but she said that the proposal to alter terms reflected a change in conditions at MBI, rather than at Businessland.
"The information is proprietary, and if anybody is to comment on it, you should discuss it with MBI," she said. Parnes said he knew of "absolutely nothing" that would have accounted for the change.
"We are saddened by Businessland's attempt to renegotiate terms that had been previously agreed to," Parnes said yesterday. He said that MBI would continue to operate independently for the time being, but added that "we will explore all opportunities" for other mergers.
According to Parnes, Businessland proposed changing the terms of the deal Thursday, a day before the final agreement was to be announced. "They requested the change at the last minute," said Parnes. "That's business. A deal is not a deal until it's done."
MBI's board met and rejected the new terms, he said. "We say that we are very profitable and very good, and we had agreed on a certain ratio."
The combination of the two firms was expected to provide Businessland with a dramatically increased presence on the East Coast. MBI, which has approximately 500 employes and revenue of $95.7 million, has 36 computer stores on the East Coast between Boston and Atlanta.
"I think MBI would have added a lot to their strength on the East Coast and to their management expertise," said Paul A. D. Evans, an industry analyst with Warburg Rowe & Pitman Akroyd. "I think what it means is that Businessland will be aggressively looking at other candidates" for merger, Evans said.
Both MBI and Businessland have been expanding through acquisitions, reflecting the trend toward consolidation in the troubled computer retail market.
MBI previously had acquired Computer South's chain of 11 computer stores in North Carolina and South Carolina, and Microsource Financial Inc., based in Boston. Those acquistions helped account for an 89 percent increase in revenue and a 23 percent increase in profits in 1985.
Businessland, which has approximately 1,500 employes and revenue of $350 million, has 69 centers in 28 major metropolitan areas. It is in the process of acquiring United Telecommunications Inc.'s AmeriSource computer centers, most of which are in the Midwest.
"As the most consistently profitable chain of company-owned computer stores in the U.S., we look forward to continued success in our own business," said Parnes.
MBI's stock was at 15 1/2 yesterday, down 1/8 on volume of 107,200. Businessland was trading at 11 1/8, down 1/4 on 150,000 shares. At the time the proposed merger was announced, MBI was at 13 3/4 and Businessland was at 10 1/2.