Belzberg Family Bids $1.56 Billion to Take Over Ashland Oil

The wealthy Belzberg family of Canada disclosed Wednesday that it offered at least $60 a share, or about $1.56 billion, to acquire Ashland Oil, a leading U.S. independent oil refiner and marketer.

The offer came in a letter to John R. Hall, Ashland’s chairman and chief executive, from Samuel Belzberg, chairman of First City Financial Corp., the Belzberg family’s principal holding company.

A spokesman at Ashland’s headquarters in Ashland, Ky., said the company had no immediate comment on the offer.

The Belzberg letter was included in a filing made with the Securities and Exchange Commission in which First City said that it and an affiliate already own or have options to buy a combined 2.63 million, or 9.2%, of Ashland’s 28.6 million common shares outstanding. At $60 a share, it would cost the Belzbergs about $1.56 billion to buy the remaining stock.

Wall Street, however, showed some caution toward the Belzberg proposal. Although Ashland’s stock rose $2.625 to $54.625 in New York Stock Exchange composite trading, the price remained well below the Belzberg bid.

Professional takeover speculators, who agreed to discuss the situation only on the condition that they not be identified, said the discount reflected investor doubts as to whether the Belzbergs will complete the transaction.

The family frequently buys a sizable stake in a company before announcing an acquisition bid. But, on some occasions, the family has dropped the bid and sold its stock back to the target company or to a third party for a profit.

Analysts also noted that it was not clear whether the offer was strictly cash or whether it might include some securities, in which case the deal’s current market value might be less than $60 a share.

Asked about the proposed terms, a First City spokesman said she could not comment beyond the SEC filing.

If it is all cash, the price “would seem to me to place a reasonably full value on Ashland’s assets,” said Rosario Ilacqua, an analyst for L. F. Rothschild, Unterberg, Towbin. If the offer is only partly cash, “it’s a whole different equation,” he said.

In his letter, Belzberg said that while First City was ready to pay $60 a share, “if you enter into good-faith negotiations with us, we believe that working together we can negotiate a higher price for Ashland’s stockholders.”

“If you reject our proposal and our offer to negotiate, we will consider all available alternatives,” Belzberg wrote. He did not elaborate.

Belzberg said that if Ashland did not respond to First City’s bid by 5 p.m. EST Monday, First City would consider its proposal rejected.

The filing said that if First City acquired Ashland, it would propose adding its representatives to Ashland’s board of directors but also expected to retain Ashland’s current management.

Ashland, with nearly 33,000 employees, is the 14th-largest U.S. oil concern, based on revenue. In its fiscal year ended Sept. 30, 1985, Ashland earned $147 million on revenue of $8.18 billion.

Unlike some of the larger oil companies that rely on production for much of their earnings, Ashland is mainly a refiner and marketer.