Union Carbide to Sell Unit for $800 Million
Union Carbide said Monday that it intends to sell its home and automotive products division, the maker of such familiar products as Prestone antifreeze and Glad plastic bags, for $800 million in a leveraged buy-out to a group formed by First Boston Corp.
The deal largely completes the company’s plans to sell all of its consumer goods lines, a move it undertook to defuse a takeover threat mounted by GAF Corp. and its chairman, Samuel Heyman.
Separately, the company announced a drop in net income for the calendar first quarter to $43.3 million on sales of $1.72 billion, compared to $71 million on sales of $1.71 billion for the same period a year ago.
The figures do not include a non-recurring gain of $270 million that the company booked this year on the return to the company of surplus funds in its employee pension plans. They do reflect, however, an 81% increase in interest costs for the first quarter this year, largely reflecting the costs of its massive repurchase of stock.
That maneuver, in which about 99 million shares were retired, was also a takeover defense. Because of the stock buy-back, per-share net income rose to 38 cents from 34 cents despite the lower total profit. The figures were adjusted for a 3-for-1 stock split earlier this year.
Interest costs were $131.5 million in the first quarter of 1986, compared to $73 million a year ago.
Union Carbide said in January that it would sell off its consumer products lines and distribute all proceeds in excess of $1.1 billion to its shareholders. The rationale was to steal a march on Heyman, whose intention had been to acquire the company for debt and pay off the acquisition loans by selling off the same operations. Instead, Union Carbide said, it would sell the units itself and distribute the gains directly to shareholders.