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Hiram Walker Board Suggests Accepting Offer

Associated Press

Directors of Hiram Walker Resources recommended Thursday that the company’s stockholders accept a $3-billion acquisition offer from TransCanada PipeLines.

Hiram Walker’s board approved the deal after considering a sweetened bid by Gulf Canada, whose initial proposal to take over the company was rejected by Hiram Walker.

Gulf Canada officials did not immediately return a telephone call seeking comment.

TransCanada, which operates Canada’s main east-west natural gas pipeline, said in announcing its proposal Wednesday that the tender offer was subject to approval by Hiram Walker’s board.

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The board also met a second major condition of TransCanada’s bid--that a Hiram Walker-led investment company, called Fingas Investment Corp., drop its plans to buy up to 50 million shares, or about 44%, of Hiram Walker’s common stock.

The directors said it was “not in the best interests of shareholders” for the Fingas offer to proceed “at this time.”

Hiram Walker, a Toronto-based distilled spirits and energy concern, formed Fingas to buy the stock as part of its defense against Gulf Canada. The strategy also included Hiram Walker’s agreement to sell its liquor business to Allied-Lyons PLC of Britain for $1.9 billion. Allied-Lyons also was part of the Fingas group.

At its meeting Thursday, Hiram Walker’s board--with TransCanada’s approval--reaffirmed its decision to complete the sale of the liquor business to Allied-Lyons.

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TransCanada wants Hiram Walker for its Home Oil Co. oil and gas subsidiary and its 34% stake in Interprovincial Pipe Line Ltd., an oil pipeline concern that in turn owns 17% of Hiram Walker. However, TransCanada plans to sell Hiram Walker’s 83.5% stake in Consumers Gas Co., a Canadian gas distributor.

TransCanada offered $36.50 (Canadian) cash, or $26.25 at current exchange rates, for each of Hiram Walker’s common shares. Hiram Walker would have 113.7 million shares outstanding if all warrants, options and convertible preferred shares were converted into common stock.

On the New York Stock Exchange, Hiram Walker’s stock edged up 12 1/2 cents a share to $26.25 in heavy trading of 2.8 million shares.

The other major condition of TransCanada’s offer is that at least 50.1% of Hiram Walker’s stock be tendered to the company.

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Gulf Canada, headquartered in Calgary, Alberta, is an energy and forest products company 80% owned by the Reichmann family of Toronto through its Olympia & York Developments Ltd. unit.

Gulf Canada triggered the contest for Hiram Walker last month when it launched a bid of $32 (Canadian) a share for a controlling stake in the company.

After Hiram Walker responded with its defensive moves, Gulf Canada and Olympia & York, which already owns an 11% interest in Hiram Walker, said they were prepared to make a joint offer of $35 (Canadian), or $25.18, if Hiram Walker dropped its plans to sell its distilled spirits group and buy back its stock.

Olympia & York and Interprovincial also asked the Ontario Supreme Court to block Hiram Walker’s defensive moves, but the court late Wednesday dismissed the request. Interprovincial had supported the Olympia & York-Gulf Canada bid for Hiram Walker.

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