Sigoloff Charts Course for a New and Bigger Wickes Cos.
While Wickes Cos. was dazzling the investment community last week with two rapid-fire, billion-dollar takeover deals, the company’s head honcho was handling many of the last-minute details by phone--from Japan.
Another executive might have felt out of touch so far from home at such a crucial time, but not the ever-confident Chairman Sanford C. Sigoloff. Having laid the groundwork for agreements to buy textile maker Collins & Aikman and aerospace conglomerate Lear Siegler, Sigoloff figured he could safely scoot off to a four-day international investment conference.
Back at home base, Sigoloff sounded almost breathless with excitement Friday as he chatted briefly in a telephone interview about Wickes, which he rescued from Chapter 11 bankruptcy court protection and continues to bolster with acquisition after acquisition. He talked about his delight at finding a “premier manufacturer” like Collins & Aikman and about the quick decisions that led to the Lear Siegler purchase.
“Let me take you back to essentially when we got out of Chapter 11,” Sigoloff began. “We said we’d improve operations, make regional acquisitions and strategic acquisitions to redirect the company. You saw us buy (Gulf & Western’s) consumer and industrial products group and ultimately rearrange assets.
“As we came into 1986, we said almost the same thing--that we would continue to make selected, regional acquisitions, that we were going to make another major acquisition and put in place the growth of the company. . . . We went through two unfriendly (takeover) attempts and, at the end of the second one, I said our next acquisition would be, if at all possible, friendly.”
He was true to his word. The $1.16-billion agreement to purchase Collins & Aikman, announced Nov. 8, has the blessing of that company’s management, which will stay on. And Lear Siegler, which resides a few blocks from Wickes in a Santa Monica industrial park, agreed to a sweetened $1.7-billion deal after days of juggling other offers.
“Clearly, part of Collins & Aikman adds value to our building materials and automotive, apparel and hosiery businesses,” Sigoloff said. “Now we have a tremendous name. With Lear Siegler, we get the automotive and aftermarket (businesses) and pick up a brand-new part--aerospace and technology--which is terribly exciting to me because it goes back to my past.”
Sigoloff was graduated from UCLA in 1951 with a degree in physics and chemistry and for years conducted research projects for the Atomic Energy Commission. He still considers himself a card-carrying scientist despite his business orientation.
The two acquisitions would nearly triple Wickes’ annual sales to more than $8 billion from 1985’s $2.8 billion and catapult it into the top 50 of the Fortune 500 list of largest industrial companies. They would also make the company a dominant force in manufacturing.
For Sigoloff, it was all simply a matter of “hard work and opportunism.”
“We had looked at a large number of companies and valuated them,” he said. “One I thought I’d never get the opportunity to meet with was Collins & Aikman. Clearly, it was well run and one of the premier manufacturers in the U.S. They had no reason to be acquired.”
At a four-hour meeting arranged by the investment banking firm of Goldman, Sachs & Co. about eight weeks ago, Sigoloff had “good camaraderie and good dialogue” with the New York textile concern’s management. “Time went by . . . and I never let up on Goldman,” Sigoloff said, adding that the friendly deal was nailed down just before he left for Japan last Friday.
Analysts view the company, a highly regarded manufacturer of wallpaper and upholstery fabrics for the automotive and building industries, as a good fit with Wickes, a retailer and manufacturer with interests in automotive replacement parts. It operates the Builders Emporium and Ole’s home improvement chains.
Lear Siegler’s automotive business was also a strong attraction. The company operates Safelite, which Sigoloff described as the largest supplier of replacement glass, and is the No. 1 seat manufacturer. Both businesses complement current Wickes operations.
“For a long time, we had known about Lear Siegler,” Sigoloff said. “When they came under attack (a bid by AFG Partners), we started looking at our files on them again. I sent a letter to (Chairman Norman A.) Barkeley saying if you ever need to call on us, we’re in the same park.
“The opportunity presented itself to talk for a few minutes. We talked about business style and direction. They were continuing to review opportunities. . . . We went back and reviewed among ourselves how we could improve our position as an option for them.”
Soon, Wickes met with AFG Partners--which consists of AFG Industries, an Irvine glass-products maker, and Wagner & Brown, a Midland, Tex., oil and gas company--and negotiated an option to buy its 9.8% block.
Ultimately, the sides agreed on a sweetened $93-a-share bid.
Sigoloff plays down concerns that Wickes’ debt load after the acquisitions could prove troublesome. The company has about $1.4 billion in cash, but debt to finance the acquisitions plus that held by the two companies would significantly increase the $2 billion in debt already on Wickes’ balance sheet.
“I’m not sure everybody has put the pieces together. They have concentrated on the amount of debt. I guess my answer is that Wickes has gone through divestitures.” Sigoloff declined to pinpoint what Lear Siegler units might be sold.
“What I can tell you is that we’ll accelerate the burn-off of (tax-loss carryforwards) dramatically and make selected divestitures and improve operating performance. We feel we’ll begin to scale the debt schedule down rapidly once we can finally configure the company, which will take six to eight months.
“That’s a very exciting prospect for the future.”
