Dallas Firm Offers to Buy Sea-Land for $580 Million

A company headed by Dallas businessman Harold Simmons offered Tuesday to buy Sea-Land Corp. for $25 a share in cash, or a total of $580.8 million.

Contran Corp., a Dallas-based diversified holding company headed by Simmons, said the offer is subject to various conditions, including completion of financing and acceptance of the offer by Sea-Land.

Sea-Land, based in Menlo Park, N.J., is an international transportation services company and one of the largest U.S. shippers of containerized freight. The company said its directors will consider the offer at a regularly scheduled board meeting next Monday.

Sea-Land’s stock, the second most active in New York Stock Exchange trading, closed at $24.375 a share, up $2.50.

Simmons has been buying Sea-Land stock on the open market since last July, when he disclosed plans to acquire 15% of the company’s 23.23 million shares outstanding.

As of Tuesday, his Amalgamated Sugar Co. of Odgen, Utah, held about 10% of Sea-Land’s stock, according to J. Landis Martin, Simmons’ attorney.

In July, Joseph F. Abely Jr., Sea-Land’s chairman and chief executive, had called Simmons’ interest in the company “most unwelcomed.” He would not comment Tuesday on the new offer.

Asked why Simmons wanted to acquire Sea-Land, Martin explained: “Because Mr. Simmons thinks that, in the mid- to long term, this company has a good future. This industry is very depressed, with tremendous overcapacity and price cutting.”

Sea-Land was spun off into a separate company by R. J. Reynolds Industries in July, 1984, because it did not fit into Reynolds’ long-term strategy of concentrating on consumer businesses. It is currently grappling with the overcapacity problem that is heavily cutting into profits of all container shipping companies, according to Burton Strauss Jr., an analyst with E. F. Hutton in New York.

“There has been a 30% to 40% increase in container slots worldwide,” Strauss explained. “That is a lot more than any trade growth can swallow.”

For the nine months ended Sept. 29, Sea-Land’s net income plummeted to $28.6 million from $68.8 million for the same period last year. It had revenue of $1.24 billion, down from $1.34 billion in the year before.

Strauss said that the $25-a-share offer is not unreasonable, based on Sea-Land’s current level of earnings and its lackluster outlook for the next year or two.