The proposed $1.5-billion takeover of manufacturing conglomerate Lear Siegler by a relatively unknown partnership sparked a flurry of stock trading Friday that many Wall Street analysts interpreted as a sign that the fate of the company would not be resolved quickly or quietly.
Lear Siegler common stock closed at $85.75 a share on Friday, 75 cents higher than the offer made Thursday night by AFG Partners, a group composed of AFG Industries, a glassmaker based in Irvine, and Wagner & Brown, a Midland, Tex., oil and gas firm.
The trading volume of 1.6 million shares, the eighth-largest for the day on the New York Stock Exchange, represented nearly 9% of Lear Siegler's 17.8 million outstanding shares. Analysts estimated that arbitrageurs, who seek quick profits by buying the stock of takeover candidates, now own at least 40% of Lear Siegler.
"We have not heard the last of this story," said Howard A. Rubel, an analyst with the investment firm of Cyrus J. Lawrence in New York. "The book has a few more chapters left in it."
Despite the obvious interest among traders, Lear Siegler again declined any comment on the takeover offer.
A spokesman said a formal response to the proposal will probably not be made before Monday, leaving the full weekend for strategy meetings with the investment bankers the company retained last month. The bankers were hired to recommend a restructuring that would increase company value and possible defenses to corporate raiders.
AFG's offer of an "agreeable business combination or cash merger," has baffled most analysts who say they do not know whether the partnership wants to actually operate the 29-division conglomerate or plans to sell off all or parts of it. AFG representatives declined to make any comment on the offer.
Analysts said the $85-per-share offer is a healthy one and should receive serious consideration from Lear Siegler and Drexel Burnham Lambert, its investment banker. However, some analysts suggested that the corporation might be able to find a buyer for as much as $95 to $100 a share.
Possible buyers mentioned by analysts included Boeing, General Electric, Ford and Rockwell International.
At the center of the considerable speculation is Lear Siegler's Safelite glassmaking operation, which some analysts say is a highly profitable division with sales approaching $200 million a year and prospects of high growth over the next three years. Several analysts said that AFG Partners may be interested in the division, in part because of its rosy future and in part because AFG Industries founder and Chairman R. D. Hubbard once headed it.
Analyst Rubel, who said he believes that Lear Siegler has several possible responses to the offer if it does not want to accept it, including buying back its stock from AFG at a premium and finding another suitor willing to pay more for the shares.
In addition, Rubel and others suggested that the company could trade its Safelite division for AFG's estimated 5% stake in the company as a way or getting the partnership off its back. However, other analysts said such a move would strip much of the value from Lear Siegler and hurt current shareholders.
"It would rape the company," said Jon Gruber of Montgomery Securities in San Francisco. "It's the best division."