Company Run by Knapp Seeks to Buy Energy Firm
An investment company headed by Los Angeles financier Charles W. Knapp said Thursday that it wants to buy a Dallas energy company, Southern Union Co., for $242.4 million in cash.
Trafalgar Holdings said it has told Southern Union’s board that it wants to acquire the firm’s 10.1 million outstanding shares for $24 apiece. The board has until next Wednesday evening to respond, Trafalgar said.
The move comes in the wake of press reports last week that a group of British and American investors, including Knapp, have abandoned their effort to acquire Minebea Co., a Japanese ball bearing manufacturer. Though Trafalgar officials have yet to confirm those reports, they do confirm that they have sold most of their shares in Minebea and say an announcement will be made next week.
Southern Union is primarily a natural gas utility that operates in Texas, Oklahoma and Arizona. It also has refining and production operations throughout the Southwest and in such states as North Dakota and Wyoming. Southern Union also owns a savings and loan in Midland, Tex., that has about $100 million in assets, but Trafalgar says it will sell the S&L; if the acquisition goes through.
Trafalgar officials declined to say whether the firm now holds any Southern Union stock and said they have no idea how the Southern Union board will react to the proposal. Southern Union officials were not available for comment.
Southern Union is a good buy because it has “lots of assets and lots of cash,” said Mark Dodge, a Trafalgar official. If the board turns down the proposal, a tender offer “is one of the options,” Trafalgar’s Donald Reynolds added.
Southern Union earned $39.3 million in 1985 on revenue of $305 million. Its stock shot up $3.12 1/2 a share Thursday, closing at $23.25 on the New York Stock Exchange.