CARLSBAD , Document Sciences Corp., a Carlsbad-based software firm whose majority owner is Xerox Corp., has embarked on a stock purchase plan to reduce Xerox’s stake.
DSC announced Feb. 15 it is offering $2 for its shares, or 18 percent premium over the closing price on that date. The Nasdaq-traded stock closed at $1.81 on Feb. 20, which would yield a 10.5 percent premium to sellers.
DSC spokesman Jack McGannon said the purpose for the stock tender offer is to decrease Xerox’s ownership, which was 62 percent at the end of last year. By reducing Xerox’s ownership, the stock would be more attractive to outside investors, McGannon said.
“What we’d like to do is to have Xerox’s stake decline so the stock is more attractive to investors,” he said.
Connecticut-based Xerox, which owns some 6.7 million shares of DSC, is committed to selling all of its shares, but DSC agreed not to reduce Xerox’s stake by less than 19.9 percent of the total shares outstanding. The company had about 11.1 million shares outstanding at the end of last year.
The tender offer will expire March 23 unless the company’s board decides to extend it.
McGannon said the decision to reduce Xerox’s ownership has no connection to recent reports of accounting irregularities and charges by a former Xerox executive the company regularly reported higher sales from its Mexico subsidiary than accounting rules permit.
Xerox spun off DSC in September 1996 after operating the firm as a subsidiary since 1991. The initial public offering price was $12. The 52-week price has ranged from 59 cents to $6.25.
DSC makes software that enables businesses to better communicate with customers using Internet-based portals and through personalized documents that can be viewed and distributed electronically in high volume.
DSC has about 140 employees, including 90 at its headquarters office in Carlsbad. It has some 600 customers and sells its products in Canada, Australia, New Zealand, Brazil, Argentina and Chile. It has two sales offices in this country and a European subsidiary based in Paris.
Last year, DSC earned $531,000 on revenues of $22.6 million, compared with profits of $2.1 million on revenues of $24.3 million in the previous year.