Target Firm Says Rejection Is Final : Burroughs Waits for Sperry Answer to Bid
In another day of wrangling, Burroughs said Tuesday that it will wait until late afternoon today for a formal answer from Sperry to its latest, $75-a-share takeover offer; Sperry insisted that its rejection Monday was official.
Burroughs’ latest offer, made Monday following weekend negotiations and worth about $4.3 billion in cash and securities, remains in effect until 5 p.m. EDT today, the company said. Officials of the Detroit-based computer maker, including Chairman and Chief Executive W. Michael Blumenthal, remained in New York to be available to resume discussions.
Burroughs, a spokesman said, “is mystified by the Sperry response. . . . We hope that Sperry will recognize the great benefits to all of concluding a merger on Wednesday.”
No Response Expected
A Sperry spokesman, on the other hand, said that there was nothing unequivocal about the company’s reaction late Monday and that Sperry’s board of directors had unanimously rejected the $75-a-share offer. He said no further response was anticipated.
In the wake of the development, investors Tuesday slackened the pressure that has been moving Sperry’s stock price up since Burroughs’ May 5 merger proposal. Sperry was the most active issue on the New York Stock Exchange as more than 5 million shares were traded. But the stock dropped 37 1/2 cents to close at $73.25. Burroughs’ stock closed at $58.25, unchanged, in light trading.
Even Sperry’s latest move appears to lack real punch. Analysts believe that the company is resigned to the eventual merger with Burroughs and is interested in obtaining the highest offer it can get.
Sperry said it was expecting an $80-a-share offer, but Burroughs scoffed at that, saying its latest cash and securities offer was the equivalent of a combination of Burroughs’ tender offer and Sperry’s own buyback plan.
Stock Buyback Plan
After Sperry failed to respond to Burroughs’ first friendly proposal, Burroughs on May 8 launched its hostile $70-a-share tender offer, valued at $4.06 billion.
Sperry rejected the offer as being “inadequate” and responded by proposing to buy back 29.5 million of its shares--slightly less than half of the total outstanding--for $80 a share, provided Burroughs was successful in accumulating the shares that it was seeking.
Sperry has not yet filed its $2.36-billion buyback plan with the Securities and Exchange Commission. And Burroughs said its latest offer was contingent on Sperry not doing anything that would lessen Sperry’s value to Burroughs.
Burroughs officials said all offers have included a provision that Sperry’s investment bankers participate in the valuation of the securities that would be issued as part of the deal.
Burroughs said it would issue $1.1 billion each of subordinated debt and convertible preferred shares of stock to pay for just less than half of the total purchase price.
