"It was a very good time [to sell] from a market space perspective," Sanchez said yesterday. "We want to be part of the winning team. Being a $100 million company, we were too small to compete where we wanted to compete."
Sanchez said the company would remain in Malvern and still planned to move into a new building in the Great Valley business park.
He also said he expected the number of local employees to remain the same, and possibly increase, after the deal closes in the second quarter. Currently, Sanchez has 590 employees worldwide, including about 350 in the Philadelphia area.
In 2002, Sanchez reported net income of $3.87 million on revenue of $93 million. The company expects to report 2003 results next month.
Fidelity posted net income of $861.8 million on revenue of $7.7 billion in 2003.
Audrey Snell, an analyst at Brean Murray & Co. Inc. in New York, said the deal appeared fair for both Sanchez and Fidelity.
She said $175 million was a "reasonable multiple of sales" for Sanchez, and Fidelity was not overpaying, because Sanchez's sales were flat from 2001 to 2002.
Michael Sanchez, who founded the company in 1979 with his brother Frank, owns 13.4 percent of Sanchez Computer, according to the company's latest proxy statement. Frank Sanchez owns 6.2 percent.
Sanchez's largest stakeholder, Safeguard Scientifics Inc. of Wayne, said it expected to receive $40 million from the sale of its 23 percent stake in Sanchez. Safeguard, a holding company that invests in tech start-ups, also said it expected an additional $4 million from the sale of Sanchez shares owned by Safeguard founder Warren "Pete" Musser that had been pledged as collateral under a loan agreement between Musser and Safeguard.
Contact staff writer Wendy Tanaka at 215-854-2752 or wtanaka@phillynews.com.
