Wickes’ Tender Bid for Owens-Corning Will Begin Today

Wickes Cos., which last week received a cool response to its $70-a-share bid for Owens-Corning Fiberglas, said Monday that it will begin a $74-a-share tender offer today for all of the common shares of the building products maker that it does not already own.

Separately, the Santa Monica-based parent of Builders Emporium said in a filing with the Securities and Exchange Commission that it holds 2.53 million shares, or 8.5%, of Owens-Corning, either directly or under option arrangements with Bear, Stearns & Co.

In the filing, Wickes said it “intends to seek control” of Owens-Corning and “is considering strategies for achieving such control.” It added, however, that its “activities are subject to change at any time” and that it could attempt to dispose of its Owens-Corning stake.

Estimated $2.1-Billion Cost

After the close of the market Monday, Wickes issued a statement saying its tender offer would depend on, among other things, the company’s obtaining enough financing to handle the estimated $2.1-billion cost of buying the remaining Owens-Corning shares.

A spokeswoman for Owens-Corning, based in Toledo, Ohio, said the company had no comment on the tender offer.

Sources close to the negotiations said that representatives of both companies met before Wickes announced its tender offer. At the meeting, the sources said, Owens-Corning officials stated that they did not want to discuss a combination of the two companies but rather ways in which the two companies “could be disengaged.”

The sources added that no further negotiations were held.

A Wickes spokesman said the company raised its offer to $74 a share “in order to offer Owens-Corning Fiberglas shareholders what we believe to be a full and fair price in the hope and expectation that the board will support the offer” and eliminate a “poison pill” anti-takeover provision. In June, Owens-Corning installed a poison pill defense that, if triggered by a hostile takeover, would allow shareholders to buy stock at half-price and make a takeover much more expensive.

On Monday, Wickes filed suit in Delaware Chancery Court to force Owens-Corning to buy back the poison-pill common share purchase rights.

Stands to Make Profit

Gregory H. Kieselmann, an analyst at Morgan, Olmstead, Kennedy & Gardner in Los Angeles, said that Wickes’ sweetened offer is “not surprising at all” and that the company “has a very good chance of pulling it off.”

If nothing else, he said, Wickes already has a “nice, fat profit” on its Owens-Corning shares, assuming that its stake had been purchased at an average price of about $60 a share. Based on Owens-Corning’s close Monday of $78.12 1/2, up $1.37 1/2, that profit would be about $45 million. Wickes, which is traded on the American Stock Exchange, fell 12 1/2 cents to $5.37 1/2.

Wickes said that in addition to $1 billion in cash that the company has available for the offer, it intends to raise additional funds for the tender offer from the private placement of securities. Wickes said that Drexel Burnham Lambert, a New York investment banking firm, has informed Wickes that “it is highly confident it can obtain commitments” for up to $1.1 billion in securities.