WASHINGTON — New York-based Brookhurst Partners Limited Partnership said Wednesday that it acquired a 7.1% stake in Zenith Electronics Corp. and said it may propose a business combination with the company.
In a filing with the Securities and Exchange Commission, Brookhurst said it believes that Zenith, a Glenview, Ill., consumer electronics firm, is undervalued and that its stock has substantial potential for appreciation.
Zenith has been rumored as a potential takeover target for much of this year. Speculation that the firm was planning to eliminate large parts of its traditional consumer electronics business has also lifted its stock value in recent weeks.
Brookhurst said if Zenith management fails to take steps to enhance shareholder value, it may propose a business combination or purchase additional Zenith shares. The firm left open the possibility of selling its stake, depending on market conditions and other factors.
Brookhurst, whose general partners are controlled by Herbert Abelow and Nicholas Ihasz, said it does not consider itself a passive investor.
The firm said it will continuously monitor Zenith and may hold talks with Zenith management about the company's businesses.
Brookhurst said it spent $42 million to purchase its current holdings of 1,845,500 shares of Zenith common stock. In open market transactions between April 25 and June 20, Brookhurst made net purchases of 1,404,600 Zenith common shares at $18.50 to $29 a share.