American Capital does not believe Merisel can close merger deal, cites material adverse effect

By Lisa Kerner

Charlotte, N.C., June 3 - American Capital Strategies, Ltd. said it reserves the right to terminate its merger agreement with Merisel, Inc.

In a May 30 letter to Merisel's counsel, American Capital stated it believes Merisel had experienced a company material adverse effect and would not be able to satisfy the merger agreement's closing conditions.

American Capital based its belief on Merisel's 10-Q for the first quarter released on May 15, noting that Merisel's business has "deteriorated substantially in the first quarter of 2008."

The letter was included in a schedule 13D filing with the Securities and Exchange Commission.

American Capital, in a prior letter to Merisel, offered to renegotiate the transaction price; mutually agree to terminate the merger agreement; or wait to see if the closing conditions would be satisfied by the outside date.

Merisel, according to American Capital, would not renegotiate the transaction price at an appropriate level.

It was previously reported that Merisel agreed to be acquired by American Capital Strategies affiliate Tu Holdings, Inc. for $5.75 per share in cash, or some $46 million.

Merisel is a New York visual communications solutions company.

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