The investment group seeking to buy Lear Siegler Inc. stepped up its campaign Monday with a letter to the company's directors seeking the repeal of their anti-takeover measures and a board order to force Lear executives to begin sales negotiations immediately.
AFG Partners has amassed a 9.8% stake in Lear Siegler and has been trying for the last week to meet with company executives to negotiate an all-cash purchase of the company for at least $85 per share, or a total of about $1.5 billion.
A Lear Siegler spokesman said executives are studying the most recent letter and will probably not comment on the takeover attempt until the company's annual shareholder meeting Wednesday.
In its letter to Lear Siegler directors, AFG Partners asked them to redeem the preferred stock purchase rights they issued to shareholders earlier this year as part of an anti-takeover measure. The purchase rights, which analysts said are typical of most anti-takeover protections, would increase the number of outstanding shares in the company and raise the cost of a hostile takeover, such as a tender offer.
AFG Partners have said they will consider a hostile takeover, including a tender offer for all outstanding shares, if their friendly proposal is rejected. The partnership is equally owned by AFG Industries of Irvine, a major glass manufacturer, and Wagner & Brown, an oil and gas concern in Midland, Tex.
Analysts said Monday that Lear Siegler's anti-takeover measures probably are not strong enough to defend against a minimum $85-per-share offer. "It's almost impossible to stop an all-cash offer like this," said Howard A. Rubel, of the Cyrus J. Lawrence stock brokerage in New York.
Rubel said the request that the board instruct management to begin negotiating immediately shows that the partnership is serious about resolving the takeover quickly, probably before the end of the year in order to qualify any shareholder and partnership profits under the current tax law.
In a filing Monday with the Securities and Exchange Commission, the partnership said that since Sept. 5 it had purchased nearly 1.8 million shares of Lear Siegler for $122.3 million. The cost ranged from $55.75 a share to $81, with an average per-share cost of about $69.50. In trading Monday on the New York Stock Exchange, the company's shares closed at $88.375, up $2.625.
AFG Industries shares, in trading on the NYSE, closed at $30.625, off 12.5 cents for the day.