Lear Siegler Chairman Norman A. Barkeley said Wednesday that he has doubts that the Santa Monica aerospace and manufacturing conglomerate can remain independent in the face of offers from several companies to buy all or part of it.
Barkeley said that in recent weeks the company has received unsolicited bids from several "major American industrial and financial" companies as well as from the investment group of AFG Partners. The bids, he said, are under review by Lear Siegler's investment banker, Drexel Burnham Lambert, and he expects that the company will respond by the end of the year.
Although Barkeley would not name the other companies that have made bids, analysts have speculated that parts of Lear Siegler could be attractive to Ford, Allied Signal, Rockwell International and General Electric. Representatives of those companies could not be reached for comment late Wednesday.
Even before the offers were received, Barkeley said, the company saw itself as an attractive takeover target and was trying to restructure its operations to defend against moves from the outside.
Barkeley noted that within the last 18 months, the company has sold six of its 52 operations and consolidated the rest into 29 divisions to streamline management. In addition, he said the company had been talking about a further restructuring involving just its automotive and aerospace units when AFG Partners' takeover bid was made last week.
"We had anticipated that we were a candidate for takeover," he acknowledged in an interview after the company's annual shareholder meeting. "I can't say I'm optimistic that we will keep the company independent," Barkeley added.
Partnership Owns 9.8% Stake
Those interview comments were his most extensive since AFG Partners, which owns 9.8% of Lear Siegler's stock, launched its unexpected $1.5-billion takeover attempt last week. Still, he would not give specifics of the company's defense strategy or the moves that are available to it.
"You can appreciate the sensitivity of this," Barkeley told reporters at a news conference after the subdued annual meeting.
On Wall Street, investors again bid up the price of Lear Siegler shares Wednesday to a new all-time high. In active trading, the stock closed at $90.25, up $2.
Analysts said the continued buying spree indicates that investors, who include a substantial number of arbitrageurs, believe that AFG Partners will not win Lear Siegler for its earlier, minimum $85-a-share bid. Analysts have repeatedly said that the company could bring between $90 and $105 a share from the right buyer or combination of buyers.
Although Lear Siegler has never publicly rejected or criticized the AFG bid, Barkeley's comments on Wednesday indicate that the company is determined to develop a restructuring plan to rival the offer.
Barkeley said the other offers are being seriously considered and are viewed by the company as a continuation of its earlier efforts to restructure its operations around its most profitable divisions.
However, analysts acknowledged that the continued threat that AFG Partners could launch a hostile tender offer for the stockholders' shares means that Lear Siegler will be forced to respond quickly with its own plan to satisfy shareholders.
Because an estimated 40% of the company's stock is held by arbitrageurs, whose business is to seek quick profits by speculating on takeover targets, analysts say the company's plan must also be more attractive than that from AFG Partners.
Meanwhile, AFG Partners continued to keep the heat on Lear Siegler with its announcement Wednesday morning that it had secured a $400-million commitment from an unidentified bank to finance its takeover efforts. The investment group said the bank had also agreed to try to arrange a credit line for an additional $450 million.
The partnership said it can use the proceeds to acquire Lear Siegler stock "through open market purchases, privately negotiated transactions, a tender offer, or any combination thereof." The partnership consists of AFG Industries, an Irvine glass maker, and Wagner & Brown, a Midland, Tex., oil and gas firm.
Earlier this week, Barkeley said he would meet with representatives of the partnership to discuss its offer. However, he said Wednesday that no firm date for the session had been set.
Barkeley declared that Lear Siegler is not considering an offer to buy back the partnership's nearly 1.8 million shares and has not decided how to react if the partnership makes a tender offer for the remaining shares.