Wickes Sweetens Bid for Gypsum to $60 a Share : Company’s Latest Proposal Apparently Fails to Top Competing Buy-Out Offer

Wickes Cos. on Thursday sweetened its offer for National Gypsum to $60 a share in cash, but the new proposal confused analysts because it apparently fails to top an existing offer by a management-led group.

The investor group headed by National Gypsum Chairman and Chief Executive John P. Hayes has proposed a leveraged buy-out in which shareholders would receive $46 in cash and $28 in notes for each common share of the Dallas building products and services company. The package is expected to be worth $62 to $63 a share once the notes are discounted by the market, analysts said, although some valued the cash and notes as low as $60.50 a share.

That offer, made April 13, replaced a previous bid of $41 in cash and $17 face amount of subordinated discount debentures that analysts had valued at $9 to $10 per share. Before that, the management-led group had offered $40.50 in cash and $17 in notes. In a leveraged buy-out, investors borrow against a company’s assets to buy the firm.

Vote Set for April 25

Santa Monica-based Wickes had topped management’s early offers by bidding $54 per share in cash for each of National Gypsum’s 22.8 million shares. At the time, Wickes owned 300,000 shares of National Gypsum. A Wickes spokeswoman declined to say if Wickes’ holdings have changed since the offer was made April 9.

Like Wickes’ first offer, the $60-per-share proposal is conditioned on the termination of management’s leveraged buy-out. Shareholders will vote April 25 on management’s proposal.

“It seems a little confusing to me (because) it doesn’t top the offer that’s already on the table,” said John Stanley, an analyst who follows National Gypsum for the investment firm Wertheim & Co.

Wickes seems to be saying, “ ‘If your offer doesn’t make it, we stand here with an offer at a slightly lower price,’ ” Stanley said. “It’s the same as giving up.”

“It doesn’t really seem to be competitive,” said Jonathan Goldfarb, an analyst with Merrill Lynch. “Maybe it’s a way of gracefully extricating themselves.”

A Wickes spokeswoman declined to elaborate on the announcement.

A spokesman for National Gypsum declined to comment on Wickes’ offer.

The stock market reacted unfavorably to Wickes’ offer. Both companies’ shares were among the most actively traded issues on their exchanges, and both closed lower.

Wickes fell 12 1/2 cents a share to close at $6.12 1/2 on the American Stock Exchange. On the New York Stock Exchange, National Gypsum closed at $61.75, down $2.

Wickes’ offer also is subject to arranging financing, executing a “mutually acceptable” definitive merger agreement and obtaining the approval of National Gypsum’s board of directors and shareholders.