Ex-Cell-O Rejects $900-Million Bid From Textron

Ex-Cell-O Corp. directors rejected a $900-million takeover offer by Textron as too low because of recent improvements in the company’s profitability, it was announced Thursday.

“Textron’s $68-per-share proposal fails to recognize the full value of Ex-Cell-O today,” Ex-Cell-O Chief Executive E. Paul Casey said in a written statement. “At this price, Textron, not our shareholders, would reap the benefits we expect to see from our extensive restructuring.”

Ex-Cell-O directors voted on the Textron proposal during a meeting Wednesday in New York but did not reveal the outcome of the meeting until Thursday.

The decision touched off speculation that a bidding war for Ex-Cell-O stock might ensue. But Textron’s vice president for corporate communications, Raymond W. Caine Jr., said Thursday that he would not comment on whether the company would increase its bid.

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“We’re in a ‘no comment’ mode,” Caine said.

Ex-Cell-O, based in this Detroit suburb, makes dashboards, bumpers, armrests, headrests, gaskets and other automotive products. Its aerospace products include engine parts, and it also produces a range of marine products.

At the New York meeting, company directors told management to consider other financial alternatives, including more negotiations with Textron, a possible leveraged buyout by management and recapitalizing the company.

Ex-Cell-O officials said their belief that the stock is undervalued is based on opinions from financial consultants and on expectations that a recent restructuring will result in sharply increased earnings for stockholders.

“We have aggressively pursued that program over the past two years, during which we have built our aerospace and defense operations internally and through acquisitions,” Casey said.

“We have closed and consolidated machine-tool facilities, and we have taken actions to improve the long-term profitability of our automotive business,” he said.

Textron, based in Providence, R.I., made an unsolicited bid of $68 a share last week for 13.3 million outstanding shares of Ex-Cell-O common stock, or about $900 million.

Ex-Cell-O was traded actively on the New York Stock Exchange on Thursday, and it closed at $76.25 a share, up $1.62 1/2 a share from Wednesday.

Stock market analysts speculate that the value of the stock will rise before a takeover offer is accepted.

“The market seems to think it’s a done deal,” said David Sutliff, vice president of Salomon Bros. in New York. “They’ll get $75 (per share) one way or another” based on stock market activity.

Philip Friedman, research vice president at Drexel Burnham Lambert in New York, thought the final deal would be at $75 to $80 per share.

“They (Ex-Cell-O) owe it to their shareholders to contact other people to see if a higher bid is forthcoming,” Friedman said.

Founded in 1919, Ex-Cell-O reported a profit of $57.6 million last year on sales of $1.14 billion, despite its large investment in the beleaguered machine-tool industry.