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Golden West's Board Endorses Lyon's Offer

December 24, 1985|LESLIE BERKMAN | Times Staff Writer

After the William Lyon Co. raised its cash offer by more than $3 million, the board of directors of the Santa Ana-based Golden West Homes Monday unanimously recommended that its stockholders approve the proposed $12.4-million merger with the Lyon company.

Jack D. Steele, dean of USC's School of Business Administration and head of a committee of Golden West directors assigned to review Lyon's merger proposal, said William Lyon called him Friday to say he would raise his offer to $5 a share--up from $3.75 a share--for 2.5 million of Golden West's outstanding shares.

Lyon, who is chairman of the Newport Beach-based William Lyon Co. as well as Golden West, already owns 26.9% of Golden West's common stock. He could not be reached Monday to comment on his decision to boost his offer.

Meeting in March

In a prepared statement Monday, Golden West said the Lyon offer is still "subject to negotiation of a definitive agreement, approval of Golden West shareholders at a special meeting expected to be held in March, 1986, and certain regulatory approvals."

At the same time, Golden West said it posted a net loss of $164,000 for the second fiscal quarter ended Nov. 24, compared with a loss of $1.99 million for the same period a year ago. Sales increased to $16.9 million, from $15.4 million a year earlier.

For the first fiscal half, Golden West had a net income of $2,000, compared with a net loss of $2.3 million for the prior year. Sales were up to $35 million, from $32.2 million a year earlier.

Lyon's previous offer of $3.75 a share for Golden West was made on Nov. 13 and technically expired a week later. Meanwhile Golden West was hiring an outside securities analyst, Bateman Eichler, Hill Richards Inc., to determine the "fair price" of Golden West's stock.

Golden West President Harry Karsten Jr. said Monday that after a 30-day study, Los Angeles-based Bateman Eichler concluded that the fair price was $5 a share and Lyon was told. "I'm sure there was discussion between the fairness committee (headed by Steele) and the William Lyon Co.," Karsten said, when asked how the Lyon offer happened to match the Bateman Eichler stock valuation.

Doubts were raised early about the viability of Lyon's $3.75 offer when, apparently in anticipation of a buy-out, the selling price of Golden West's shares jumped to $4.50, up $1.25 a share in trading on the American Stock Exchange.

Stock Price Slipped

After Lyon's $3.75 a share offer was announced, however, the selling price of Golden West stock slipped. At the close of trading Monday, before Lyon's revised offer was disclosed, Golden West shares were selling for $3.875 a share, up 12.5 cents from Friday's close.

Golden West's directors have said that if the price was right, they would welcome a merger with the William Lyon Co., one of Southern California's largest home-building companies, in hopes that Lyon developments would give Golden West a ready market for its product.

Like other producers of mobile homes and manufactured housing, Golden West has suffered losses in recent years, in large part because of a scarcity of land in Southern California that is zoned for its products.

Lyon, for his part, has said that the use of mobile homes and prefabricated housing produced by Golden West could help his development company provide lower-cost housing. He has predicted that ultimately so-called manufactured housing could account for up to 10% of the homes that the William Lyon Co. builds in California.

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