Seeks to Thwart Hostile Takeover by Gulf Canada : Hiram Walker to Sell Its Distilled Spirits Unit

Hiram Walker Resources Ltd., seeking to thwart a hostile takeover bid from Gulf Canada Corp., said Monday that it has agreed to sell its distilled spirits unit for $2.6 billion (Canadian), or about $1.86 billion at present exchange rates.

Toronto-based Hiram Walker, the world’s fifth-largest distiller, did not identify the buyer except to say that it was a major international corporation.

Hiram Walker’s distilled spirits subsidiary makes such alcoholic beverages as Canadian Club rye, Ballantine’s Scotch and Tia Maria and Kahlua liqueurs. Its sale would leave the company as principally an oil and gas and gas-distribution concern.

Hiram Walker also said that Fingas Investment Corp., a company in which it and the unnamed purchaser of the distilled spirits business each have a minority interest, planned to buy up to 50 million Hiram Walker common shares for about $29 a share. The 50 million shares represent about a 50% voting stake in Hiram Walker, analysts said.

Hiram Walker’s defensive moves came after Gulf Canada--a Calgary-based oil and gas and forest products concern--made a $720-million offer on March 19 for a 38% stake in Hiram Walker. That proposal included an offer to buy 26 million Hiram Walker common shares for $32 (Canadian) each, or about $22.85 each, and all of the company’s 13.5 million Class D preferred shares for $28.625 (Canadian) each, or $20.45 each.

Then Gulf Canada expanded the common share purchase offer to 40 million shares, which would give Gulf Canada a majority of the voting shares. The offer for the preferred stock was unchanged. The current value of Gulf Canada’s revised bid is the equivalent of $1.2 billion.

Gulf Canada received support from Hiram Walker’s largest single shareholder, Interprovincial Pipe Line, which indicated that it would not tender its 15% Hiram Walker holding.

Gulf Canada’s offer, which remains at the original price, will take place Friday on the Toronto and Montreal stock exchanges. It is not open to American shareholders of Hiram Walker.

Hiram Walker, which also has major energy operations in Canada, has been repeatedly frustrated in its struggle to avoid Gulf’s embrace.

Last week, it lost appeals against the Gulf offer in a U.S. district court and before the Toronto Stock Exchange and the Ontario and Quebec securities commissions, which regulate the Toronto and Montreal stock exchanges, respectively.

Speculation that Hiram Walker would buy back its own shares or seek a better offer from a “white knight” was further intensified last week when the company arranged a $1.8-billion line of credit with major Canadian banks.

In addition to its distillery operations, Hiram Walker’s holdings include Home Oil, a major Canadian oil company; 83.5% of Consumer’s Gas, an Ontario natural gas utility, and 34% of Sovereign Oil, an energy concern in Britain.