Ashland Averts Takeover, Buys Back Belzberg Stake
Ashland Oil Inc. averted a takeover threat from the Belzberg family of Canada by agreeing Tuesday to buy the Belzbergs’ 9.2% stake in Ashland for $51 a share, or $134 million.
The Belzbergs simultaneously dropped their $1.8-billion offer to buy the oil refiner and marketer and agreed not to buy any more Ashland voting securities for 10 years.
The agreement, which remains subject to approval by Ashland’s directors, would give the Belzbergs’ companies a profit, before expenses, of $15.6 million on their investment.
The agreement was in keeping with the Belzbergs’ history of accumulating a major interest in a company, proposing a takeover and then selling back the stake for a profit instead.
Wall Street Was Cautious
Although the Belzbergs have carried out some takeovers, Wall Street had been cautious from the start as to whether the family would complete the Ashland deal.
As a result, Ashland’s stock had traded well below the $60-a-share price that the Belzbergs offered to pay for the company.
After the agreement was announced, Ashland’s stock fell $1.75 a share to $49.75 in composite New York Stock Exchange trading. It had skidded $3.75 on Monday.
Ashland did not say how it planned to finance the purchase of the Belzberg shares, but it said management would give Ashland’s directors “additional proposals, including possible restructuring, which, if adopted, could affect shareholder values.”
An Ashland spokesman, who did not want to be identified, said the company would not pay any of the Belzbergs’ fees or other expenses in connection with buying the family’s shares.
“The $51 a share reflects the full price that the company is paying,” the spokesman said.
Disclosure Last Wednesday
The Belzbergs disclosed last Wednesday that their principal holding company, First City Financial Corp. of Vancouver, Canada, and another Belzberg-controlled company owned or had options to buy a total of 2.63 million Ashland shares, or 9.2% of total shares outstanding.
They also said they were prepared to offer at least $60 for each of the remaining shares and gave Ashland until Monday to enter friendly negotiations.
But Ashland, the nation’s 14th-largest oil concern by revenue, let the deadline pass without responding.