A group led by Florida investor Paul A. Bilzerian said Thursday that it owns nearly 10% of Singer Co. and might try to take control of the big defense electronics firm.
Bilzerian, a 37-year-old investor who made a fortune in Florida real estate but has yet to succeed as a takeover artist, started accumulating Singer shares in August but accelerated his buying after last week's stock market plunge.
Bilzerian's disclosure marks the second time in three months that Singer has emerged as a possible takeover target. In August, T. Boone Pickens Jr. disclosed that his Mesa Limited Partnership owned 4.4% of Singer's shares.
It couldn't be ascertained on Thursday whether Pickens still has a stake in Singer, although analysts speculated that the Texas takeover artist had sold off most of his holdings.
The price of Singer's shares has fluctuated a great deal since the summer, when it reported a $20.2-million loss related to problems with three defense electronics programs. Its shares soared to $51.50 in August from below $40 in July after Pickens revealed his interest in Singer. The company's shares sunk below $33 last week when the market began its slide.
Takeover May Be Hard
In a filing with the Securities and Exchange Commission, Bilzerian said his group now owns 2.1 million Singer shares purchased between Aug. 31 and Oct. 22 at prices from $32.90 to $57.45. On Thursday, Singer's shares soared $9.75 to close at $42 in composite trading closing on the New York Stock Exchange.
Analysts viewed Singer as vulnerable to a takeover. It has had problems with some of its defense projects, which together provided the Montvale, N.J.-based firm with 80% of its $1.7-billion revenue in 1986. In the second quarter, it took a $45-million writeoff related to the problems with three electronic navigation systems it is developing for the military.
At the same time, however, analysts said there are certain factors that could make a hostile takeover difficult. After Pickens disclosed his holdings in Singer, the company moved its headquarters to New Jersey from Connecticut to take advantage of that state's tough anti-takeover laws.
Suing to Overturn Law
Bilzerian, in fact, said he limited his Singer holdings to 9.99% because the state's laws require shareholders who own 10% or more of a New Jersey company to wait five years before launching a hostile bid. The law, called the Shareholder Protection Act, also restricts the breakup of a firm under certain conditions.
In his filing with the SEC, Bilzerian said he is suing in federal district court in New Jersey to overturn the state's anti-takeover laws.
Montgomery Securities analyst Thomas Lloyd-Butler speculated that the government might intervene to prevent a hostile takeover of Singer, an important defense contractor. "I don't know of a single hostile takeover of a defense company. The classified nature of some of their programs might prevent such a takeover," he said.
In his filing with the SEC on Thursday, Bilzerian said that his group would likely sell off Singer's defense business to finance the acquisition. It wold keep its commercial businesses, which include the hand power tools produced under the Craftsman label for Sears.
Bilzerian said that his group has had discussions with bankers about the possibility of raising funds for an acquisition.
Though a successful investor, Bilzerian hasn't had much luck as a corporate raider. Over the last few years, he has lost takeover battles for such firms as Hammermill Paper, apparel maker Cluett, Peabody & Co. and H.H. Robertson & Co., a Pittsburgh construction company.
Thomas L. Elliott Jr., a Singer vice president, said the company had no comment on Bilzerian's disclosure. Bilzerian couldn't be reached for comment.
Lloyd-Butler said he expected Singer to strenuously fight any takeover attempt. "These people have built the company themselves and believe in it," said Lloyd-Butler. He said that Singer's new chairman, William F. Schmied, exhibited the same "tenacious attributes" of his predecessor, Joseph B Flavin, who died Oct. 8.