Simmons Bids $784 Million for NL Industries

NL Industries Inc. said Thursday that Dallas financier Harold C. Simmons had acquired 16% of its stock and that he had offered $784.5 million to buy the remaining shares.

NL said it would consider the bid.

Simmons’ offer came in a letter to NL in which he also disclosed that his affiliated companies already had bought more than 10 million of NL’s 62.3 million common shares outstanding.

In the letter to Theodore C. Rogers, NL’s chairman and chief executive, Simmons said he wanted to negotiate a friendly purchase for $15 a share. As an alternative, Simmons offered to buy--for $15.25 a share--all of the shares tendered in response to a pending self-tender offer by NL. Such a move likely would give Simmons control because NL has said its offer has been heavily oversubscribed, with 41 million shares being tendered.

NL’s common stock closed up 12 1/2 cents a share at $14.75 in New York Stock Exchange composite trading Thursday.

The stock buyback offer is part of a restructuring plan by NL, a chemical and oil field services concern. NL launched the plan in April to thwart an earlier takeover attempt by Coniston Partners, a private New York investor group.

Under the offer, NL offered to buy back 7.5 million, or 12%, of its common shares. The offer is a so-called Dutch auction, whereby NL’s holders chose a price between $15.12 1/2 and $16 a share when they tendered their stock. Once the offer closes, NL would select a price in that range. Any shares tendered above that price would be excluded from the offer.

NL planned to finance the offer with proceeds from other restructuring moves, including a reorganization of its pension plan that was expected to provide about $150 million in surplus funds. NL also planned to sell up to 20% of its chemical business through a public stock offering.

Coniston Partners, which offered $16 a share for NL, endorsed the company’s plan. It also sold back 2.7 million shares to NL and tendered the rest of its previous 8.5% stake in NL under the buyback offer.

However, earlier this month, NL extended the self-tender offer to June 26 and indicated that it might reduce or scrap the offer because of the weak market for its oil field services. NL, formerly known as National Lead, said the oil industry’s problems would result in it posting quarterly losses for the rest of the year. NL also plans a second-quarter writedown of oil service assets that could exceed $250 million.

NL said a decision on the buyback would be made at a directors’ meeting scheduled for June 25. It said the board would weigh Simmons’ proposals at that meeting. Simmons requested in his letter that NL respond by June 24.

In offering to buy the stock tendered in NL’s self-tender offer, Simmons said he would allow those who did not tender to keep their stock unless a majority of NL’s outside directors approved a deal for him to buy the remaining shares.

Simmons’ acquisition of a major stake in NL was not a complete surprise to Wall Street. NL said Tuesday that it believed Simmons was aggressively buying its stock, and it called on him to publicly disclose whether that was the case.

Simmons, whose companies include Amalgamated Sugar Co., is one of Wall Street’s well-known corporate suitors.

Most recently, he amassed a 39.5% stake in Sea-Land Corp. and made a hostile bid to buy the remaining shares. Sea-Land thwarted the bid in April when it agreed to be acquired by CSX Corp, which also agreed to buy Simmons’ stake in Sea-Land.

Should NL reject Simmons’ offers, NL has anti-takeover provisions in place that could make a hostile bid difficult.