Investor Group to Buy SCM for $854 Million; Tops Hanson Trust Bid
SCM Corp., fighting an unsolicited takeover bid by Hanson Trust PLC, said Friday that an investment group that includes members of its management has agreed to buy the diversified company for $854 million.
The offer of $70 in cash and securities compares to the $60-a-share bid launched Aug. 21 by Hanson Trust, a diversified British company.
A higher offer was no surprise, and investors had earlier bid up the stock of SCM well above Hanson’s offer in anticipation of a bidding battle.
In trading completed before the new offer was disclosed, SCM closed at $67 a share Friday, unchanged from the previous day and up $12 from the level that it held before Hanson announced its offer.
Hanson Studying Deal
Chris Guntner, manager of acquisitions for Hanson Industries Inc., the U.S. subsidiary of the London-based Hanson, said that the SCM announcement was being studied and that it was too soon to say whether Hanson’s bid would be increased.
Paul Elicker, the chairman of SCM, said Friday that a preliminary agreement had been reached with Merrill Lynch Capital Markets, a unit of Merrill Lynch & Co.
The agreement provides for Merrill Lynch to form a company with undisclosed members of SCM’s management to buy SCM for $70 a share in a leveraged buy-out.
In a leveraged buy-out, the purchase is financed with borrowed money, using either the assets or cash flow of the company being bought to pay off the debt.
SCM said it expects a definitive agreement to be reached early next week.
‘Major Commitment’
About 85% of SCM’s 12.2 million shares would be purchased for $70 a share in cash. The remaining stock would be acquired with notes valued at $70 a share.
“Merrill Lynch is making a major commitment to this transaction, and we are confident that the necessary financing and other conditions will be met so as to enable the transaction to be speedily completed,” Elicker said.
SCM is based in New York and manufactures products that include Smith-Corona typewriters, Glidden paints and Durkee foods and spices. It also has interests in paper products and chemicals.
Hanson’s operations in the United States include Endicott Johnson Corp., a shoe company; Hygrade Food Products Corp., a meat products concern; Ames Co., a producer of garden tools, and U.S. Industries Inc., a lighting fixtures business.
