Hammermill Girds for New Takeover Fight : Bilzerian Group Launches $722-Million Offer for Forest Products Company
Hammermill Paper Co., which has fended off one of the nation’s most feared corporate raiders, girded for another contest Friday as California investor Paul A. Bilzerian launched a $722-million takeover bid of the nation’s 12th-largest forest products company.
Bilzerian’s group already owns 19.6% of Hammermill’s common stock, and on Friday it began a tender offer of $52 cash for each of the remaining shares.
James Speice, a spokesman for Erie, Pa.-based Hammermill, a major producer of fine writing papers and other paper products, said the company had no immediate comment on the offer.
However, in the past Hammermill has fought hard against any acquisition by unwelcome suitors, such as New York financier and corporate raider Carl C. Icahn.
In 1980, Hammermill paid Icahn $750,000 not to wage a takeover battle against the company for at least two years.
Bilzerian said his investment group was attracted to Hammermill because it has recently modernized its plant and because “it has an outstanding distribution system.”
Stock Rises in Active Trading
He also noted that the paper industry “is an industry that is not susceptible to Japanese competition and . . . cheap (foreign) labor.”
In trading Friday on the New York Stock Exchange, Hammermill was the third most active issue, closing at $53.75, up $5.375, on trading of 2 million shares.
Bilzerian is a little-known California investor who in recent years has tried to muscle his way into the ranks of big-time corporate raiders such as Icahn, Minneapolis investor Irwin L. Jacobs and Texas oilman T. Boone Pickens Jr.
Less than a decade after his 1977 graduation from Harvard Business School, Bilzerian, 36, has managed to parlay shrewd investments in Florida real estate into big gains on the stock market. His office is in Sacramento, although his secretary said he is planning to move to St. Petersburg, Fla.
Figuring that the value of his real estate investments had crested in 1982, Bilzerian said he liquidated his holdings, got in on the start of the bull market and has watched his riches grow on Wall Street.
He has been less successful, however, in taking over companies.
In early 1985, he was squeezed out of an attempted takeover of H. H. Robertson Co., a Pittsburgh construction company.
Later that year, he failed in a highly publicized bid to take over New York apparel maker Cluett, Peabody & Co. The company thwarted his efforts by accepting a $375-million acquisition proposal from West Point-Pepperell Inc.
Winning Hammermill would be his first successful raid in three attempts.
$500 Million in Commitments
“I’ve gone to great lengths to make this one as successful as possible,” said Bilzerian, whose group also includes William and Earle Mack, principals of Mack Associates, a major real estate development firm in New Jersey.
“We are fully funded (for the takeover effort.) We already own about 20% of the common stock, and the price we’ve bid is a fair one.”
The Bilzerian group said it has received lending commitments of about $500 million from Bankers Trust Co. and National Westminster Bank, according to Daniel Good, a managing director of Shearson Lehman Bros., which is representing the investors.
Good said Shearson Lehman was “highly confident” that it could raise the remaining funds.
In a letter sent to Hammermill earlier this week, however, Bilzerian’s group said it was willing to negotiate all aspects of its bid with the company, even though the group said it considered $52 a share a generous and fair price.
In addition to writing papers, Hammermill makes printing and packaging papers, owns or controls about 440,000 acres of timberland and operates wholesale distribution centers that sell its own and other manufacturers’ products.
In 1985, the company, which has about 13,000 employees, earned $28.9 million on sales of $1.88 billion.
