The investor group pursuing a hostile takeover of Gencorp volunteered Friday to increase its all-cash offer for the company by $10 a share to $110, a move analysts called an attempt to pressure the Akron, Ohio, conglomerate into dropping any plans for a buyback of its own stock.
The maneuver means that Gencorp will now be required, at the very least, to match the offer if it wants to stave off a takeover by means of a stock repurchase. However, with the sweetened offer, the cost of such a move has been increased by about $200 million to a total of $2.4 billion if all the shares are redeemed.
"They're trying to stir the pot and put pressure on Gencorp," said Harry Millis, an analyst with McDonald & Co. in Akron.
Last month General Partners, an investment group that includes AFG Industries of Irvine and Wagner & Brown of Midland, Tex., launched a $100-a-share tender offer for Gencorp. The company has refused to cooperate with the partnership and has asked its shareholders not to sell.
Gencorp has promised to reveal its takeover alternative, a plan it has already described as "financially superior" to the hostile bid, early next week. Analysts widely expect it to include a stock repurchase. Although the company has declined to confirm the speculation, it had already announced plans for a stock repurchase when the hostile tender offer was launched last month.
Company officials declined Friday to comment on the new offer from General Partners.
The repurchase was originally to be funded, in part, from the proceeds of the sale of New Jersey television station WOR, and on Friday Gencorp announced that the $387-million sale had been completed. The company said it will realize about $250 million, after taxes, from the deal.
In related matters Friday, officials from Shearson Lehman Brothers denied charges leveled Thursday by Gencorp that the investment banking firm traded on insider information, while serving as investment advisers to General Partners.
A lawsuit filed by Gencorp late Thursday charged that Shearson was acting as its investment adviser and had access to its confidential information when it began advising General Partners on the hostile takeover.
However, a Shearson official said his company had never been retained officially by Gencorp and, therefore, the company was not a Shearson client when it began discussions with General Partners in November, 1986.
"Gencorp was not a client. They never gave us any inside information. They never retained us. They never paid us any money," said the official, who asked to remain unnamed because of the pending suit.
"This is much ado about nothing," he added. "They are trying to create an aroma of impropriety in the hope that we will back off the tender offer."