AFG Partners Makes ‘Friendly’ $1.5-Billion Offer for Lear Siegler

In an anticipated but unexpectedly quick move Thursday, AFG Partners offered a minimum of $1.5 billion for the outstanding shares of aerospace and automotive-parts conglomerate Lear Siegler.

The so-far friendly bid, made the day after Lear Siegler, based in Santa Monica, disclosed that the investment partnership had acquired slightly more than 5% of Lear Siegler’s stock, was made in a letter to Lear seeking negotiations on an “agreeable business combination or cash merger.”

AFG Partners, a general partnership of Irvine-based AFG Industries Inc. and the Midland, Tex., oil firm of Wagner & Brown, said it would pay at least $85 per share for Lear Siegler’s 17.77 million common shares outstanding and would be willing to increase the offer if Lear “can demonstrate additional value.”

Lear Siegler’s common stock, which had been boosted 50 cents a share Wednesday by news of the initial investment by AFG Partners, fell $1.50 a share Thursday to close at $81. The price, however, apparently was not affected by the formal merger offer--which was not disclosed until 5 p.m. on Thursday, long after trading had ended for the day.

In a prepared statement, AFG Partners said it will invest “$250 million of equity funds in the proposed transaction.” The statement said the partnership is working with Bear Stearns, a major New York-based investment banker, and that Bear Stearns officials are “highly confident they can arrange” intermediate financing for the deal.

AFG also said it has discussed permanent financing and is “highly confident that the required bank financing can be arranged promptly.” Officials at AFG Industries--a major manufacturer of specialty glass--declined to comment on the offer. Officials at Lear Siegler said they would not discuss it until they had studied it in detail and officials at Wagner & Brown could not be reached late Thursday.

Earlier Thursday, however, R. D. Hubbard, chairman of AFG Industries, said in an interview that he believes Lear Siegler is a valuable company.

Hubbard, who once headed Lear Siegler’s automotive glass division, said AFG Partners’ 5% investment is not intended to be a passive one. “Everything we do (invest in), we operate,” he said.

However, several analysts interviewed before the merger offer was disclosed Thursday said they did not believe that AFG would acquire Lear Siegler with the intention of running the entire company.

“I think he (Hubbard) would dispose of whatever wasn’t related to glass,” said Samuel Braude, an analyst with Rodman & Renshaw Inc. in Chicago.