A brief bidding war for J. M. Tull, a suburban Atlanta metals distributor, apparently ended Friday when Bethlehem Steel Corp. announced that it would begin a $22-per-share tender offer Monday and that it already had received options for more than 51% of Tull shares.
Los Angeles-based Earle M. Jorgensen Co. had announced early Friday that it would offer $23 per share for Tull, but it said later in the day that it would reconsider its offer in light of the “lock” that Bethlehem has on Tull, according to S. Monte Robinson, senior vice president of finance.
Both the Bethlehem and Jorgensen offers came after Inland Steel Corp. announced last week that it was making an unsolicited takeover bid of $19 per share for Tull. Before the Inland offer, Tull was not on the auction block. Tull stock closed Friday at $22.25, up $2.
The Bethlehem offer is worth $94.6 million, a substantial premium over Tull’s $63-million book value. But Arthur Lichtendorf, a metals analyst at E. F. Hutton, said Tull has excess funds in its pension accounts and 12 warehouses that are carried on the books at below market value.
“Tull is a well-run company in its business,” Lichtendorf said. “People in the steel business are looking for stability and distribution is more stable than integrated steel.”
Tull earned $6.2 million on sales of $195 million in 1984, up from profits of $5.7 million on sales of $166 million in the prior year.
A Bethlehem spokesman said the steel company has a “firm” agreement that enables it to acquire more than 3.1 million Tull shares. That includes 815,000 shares held by Tull that were acquired from the J. M. Tull Foundation and additional shares in the Tull treasury.
In addition, Bethlehem has agreements to buy 750,000 shares held by individuals, presumably insiders.
Bethlehem said it will finance the deal with cash and through existing lines of credit. The directors of both companies have unanimously approved the deal, and Tull shareholders will vote on it at a special meeting not yet scheduled.
Bethlehem last reported a profit in 1981, when it earned nearly $232 million. The company reported losses of $497.9 million in 1982, $270.4 million in 1983 and $77.8 million last year.
Jorgensen had wanted to acquire Tull because of the nearly “perfect fit” with the firm’s own metal distribution business, which lacks operations in the Southeast, where Tull is strongest, Robinson said.