AFG Partners May Renew Bid to Take Control of Lear Siegler

AFG Partners said Wednesday that it will buy more Lear Siegler Inc. common stock and may renew its takeover attempt should Wickes Cos. be unable to finance the previously announced but now endangered $1.7-billion acquisition.

A rejuvenated takeover offer “is an option that we are going to consider,” said Fred Spar, a spokesman for AFG Partners, which consists of Irvine-based AFG Industries and Wagner & Brown, a Midland, Tex., oil firm. The partnership dropped its bid to acquire Lear Siegler after agreeing to sell its 10% stake in the Santa Monica aerospace and manufacturing conglomerate to Wickes.

Lear Siegler said Wednesday it is “disappointed” by the surprise announcement that its deal with Wickes Cos. may be dead but added that it has the financial strength to pull off a previously announced “major restructuring program.”

Wickes announced Tuesday night that it has been unable to arrange satisfactory bank financing for the deal and that it is “not optimistic” it will be able to the reach the terms it wants. Wickes continued to negotiate Wednesday with its bankers.

Only last week, Wickes baffled Wall Street by announcing the Lear Siegler merger just three days after arranging to buy the Collins & Aikman textile firm for $1.16 billion.

Wickes said it had been planning to finance the Lear Siegler acquisition primarily with bank debt. But a source familiar with the bank negotiations said the banks balked at the financing terms Wickes wanted because the acquisitions would double Wickes’ debt to $4 billion.

“This doesn’t improve (Wickes’) image in the investment community,” said Anthony Pearce-Batten, an analyst with the Legg Mason Wood Walker brokerage firm in Baltimore.

“I don’t understand what’s changed so quickly” since Wickes obviously was fairly confident of its financing when it announced the takeover, he said. “Maybe a company that thought it could announce two acquisitions in three days didn’t think the second one out very well and bit off too much.”

Lear Siegler had announced plans to restructure but has never revealed any details of the plan, which was being developed by Drexel Burnham Lambert. .

Lear Siegler’s options include selling assets and borrowing money to buy back stock. Lear Siegler has already done some restructuring, selling seven divisions and consolidating 12 in the last year.

The spokesman for Lear Siegler declined to say whether the company would welcome a new offer from AFG Partners, which first put the company in the takeover derby.

In a prepared statement, AFG said that it will purchase additional Lear Siegler common stock, both on the open market and in private transactions, depending on existing market and other conditions.

Regardless of whether Wickes is able to obtain financing, it remains obliged to purchase AFG Partners’ nearly 10% stake in Lear Siegler for $93 a share, or $163.6 million, Spar said. That transaction is still in escrow, an AFG spokesman said.

The sole circumstance under which Wickes would not be obliged to buy the stock is if the merger of Wickes and Lear Siegler were blocked by federal anti-trust regulators, he added.

Despite a statement Friday by AFG Industries Chairman R.D. Hubbard that AFG Partners had been dissolved, Roger Kennedy an AFG vice president, said Wednesday that the partnership will continue to exist until “everything is finished.”

Profit on Sale

AFG Partners could be a more determined bidder than ever.

The partnership made a $32-million profit by selling its shares to Wickes.

It paid an average of $69.50 a share for the 1.8 million shares it amassed in the initial takeover attempt and said it was willing to pay at least $85 a share in cash for the remaining shares.

Yesterday, Lear shares closed at $79 in trading on the new York Stock Exchange, down $10.875 a share on news of Wickes’ financing problems. It was the sixth most active Big Board issue with nearly 1.9 million shares--or more than 10% of the company’s total outstanding shares--changing hands.

Last week, Joel Reed, chief financial officer of Wagner & Brown, said: “We haven’t lost interest in this. . . . If they drop out, we think we’ve got the only other offer on the table and will pursue it.”