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Lear Will Restructure; Price of Shares Jumps

October 24, 1986|From Reuters

Lear Siegler, a diversified Santa Monica company known for making small airplanes, announced plans to restructure Thursday, refueling takeover speculation and sending its stock price flying. The stock climbed $8 a share to close at $75 and was the second most active issue on the New York Stock Exchange as 2.14 million shares traded.

A Lear Siegler spokesman said: "We know of no takeover threat at this time."

The company said in a statement that it has retained the Drexel Burnham Lambert investment banking firm to recommend ways to "optimize shareholder values" in the near future.

The spokesman gave no specifics on which alternatives are being considered but said nothing should be ruled out.

Restructuring often makes stock values rise, averting takeovers, and frequently involves major share repurchases with money raised from selling assets. In Lear Siegler's case, analysts estimate a "breakup value" of the company at about $80 a share.

Over the past year, the company restructured into 29 divisions instead of a previous 48 divisions. Operations that have been sold off include data terminals, pre-engineered buildings, heating and air-conditioning and machine tools. Lear Siegler says it wants to focus on core product areas in aerospace, automotive and selected commercial and industrial lines.

Much of the Wall Street speculation about the restructuring centers on Lear Siegler's money-losing Piper Aircraft division.

"The light-aircraft business contracted faster than Lear Siegler was able to close plants," said Katherine Stults of Dean Witter Reynolds. Piper at one time had four plants. It now has only one.

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