NEW YORK — The bidding for SCM Corp. intensified Tuesday as Hanson Trust PLC sweetened its unsolicited offer to $72 a share in an attempt to outbid an investor group that includes senior members of SCM's management.
The offer by Hanson Trust is valued at $882 million based on about 12.25 million shares being sought and compares to its original bid of $60 a share on Aug. 21.
Last Friday, SCM announced preliminary agreement on a takeover for $70 a share by a company formed by Merrill Lynch Capital Markets and senior members of SCM's management. A definitive agreement was announced Tuesday.
SCM stock, which stood at $55 a share before Hanson Trust started the takeover attempt, shot up another $5 to close Tuesday at $72 with nearly 1.6 million shares changing hands on the New York Stock Exchange.
Hanson Trust, based in London, is a diversified company with interests ranging from hot dogs to garden tools and with annual sales from its U.S. subsidiaries of about $1.5 billion. SCM, a diversified company based in New York with products ranging from paint to typewriters, earned $41.8 million on sales of $2.18 billion in the fiscal year that ended June 30.
Hanson Trust said its improved cash offer is conditioned on SCM not granting so-called lock-up agreements or options to other bidders, including the Merrill Lynch group. A lock-up agreement enables a friendly bidder to acquire an essential portion of a business, thereby making a hostile takeover of the remaining assets less attractive.
Under the merger agreement, the Merrill Lynch investor group will begin a cash offer of $70 a share within five days for 10.5 million shares of SCM stock, or about 85.7% of the outstanding shares.
The Merrill Lynch group's bid is conditioned on a minimum of 8.254 million shares, or about two-thirds of the outstanding stock, being tendered and not withdrawn by shareholders before the offer expires. The offer will remain open for at least 20 business days.
The remaining shares would be acquired with securities valued at $70 a share.
SCM's board recommended that shareholders accept the offer from the Merrill Lynch group. SCM makes Smith-Corona typewriters, Glidden paints and Durkee foods and spices and has interests in paper products and chemicals.
Hanson Trust's major operations in the United States are Endicott Johnson, a shoe company; Hygrade Food Products, a meat products concern; Ames Co., a producer of garden tools, and U.S. Industries, a lighting fixtures business.