Wall St. Talk Has Ford as Top Hughes Bidder
The successful bidder to buy Hughes Aircraft Co. was expected to be selected in New York today, but rumors that Ford Motor had submitted the leading offer surfaced Monday on Wall Street, analysts said.
Ford, General Motors and Boeing have all submitted bids for Hughes, which was put up for sale earlier this year by its owner, the Howard Hughes Medical Institute, a nonprofit foundation.
The bids are very similar, and the winning bid is expected to fall between $5 billion and $5.5 billion in cash and notes, according to informed sources.
Kept a Close Secret
The winner will be decided on the basis of a recommendation from the medical institute’s investment banker, Morgan Stanley & Co., at a meeting this morning of the institute’s trustees. Whichever company is chosen, its bid will be closely examined, both because of its expected size and because the sale stems in large part from a lawsuit by the Delaware attorney general, who argued that the medical institute was not making the most of its assets, such as Hughes Aircraft.
Although Morgan Stanley has held its recommendation closely, the rumors citing Ford as the winner emerged when almost 1.5 million of the auto maker’s shares changed hands Monday, making it one of the most actively traded issues on the New York Stock Exchange. The per-share price dropped 12.5 cents, to $43.375.
In addition, a source close to the deal said Boeing may be “out of the race.” Boeing’s top officials were at the Paris Air Show with no plans to return today, said the source, while senior Ford and GM officials were said to be standing by to come to New York on short notice.
“The move on Ford is that it is a likely winner,” said Wendy Beale, an analyst with Smith Barney, Harris Upham & Co. “There is a rumor going around in the market, but I don’t know why people think they know Ford will win.”
E.F. Hutton auto analyst Joseph Phillippi agreed that “investors were voting Ford.”
Paul Nisbet, aerospace analyst at Prudential-Bache Securities, also said he believed that the volume of trading in Ford’s shares was significant even though it was not accompanied by a major price movement.