Pesch Makes Another Offer for AMI; Criticized as Lower Than Original Bid

A Chicago company, spurned earlier this month when it tried to buy American Medical International Inc., on Thursday renewed its quest for AMI with a new offer that experts say may be worth less than the original bid.

Pesch and Co., a health-care, information systems and real estate concern headed by Chicago physician LeRoy A. Pesch, offered $17 in cash for each share of AMI as well as preferred stock with a $4 market value and common stock with an intended market value of $1.

Pesch valued its latest bid for AMI at $1.91 billion.

That compares to an earlier $20-a-share all-cash bid valued at $1.74 billion.

Pesch said its newest proposal, which names Security Pacific Merchant Banking Group and the New York investment house of Donaldson, Lufkin & Jenrette as advisers, will remain open until March 10.

Like its competitors, Beverly Hills-based AMI--one of the nation’s largest hospital management firms--has been reeling from cost-cutting measures introduced in response to federal efforts to hold down the cost of medical care. Experts speculate that Pesch, who was unavailable for comment, may believe that the hospital market may have bottomed out and is poised for a comeback.

Yet analysts said that because the offer from Pesch contains only a $17-a-share cash provision compared to $20 cash in the first offer, it will likely draw the same icy reception that prompted AMI’s board to unanimously reject Pesch’s first bid. AMI directors did not explain why they rejected the first offer.

“I think the market is telling you that there is a good probability that Pesch cannot get their deal through,” Todd Richter, a health-care analyst for Morgan Stanley in New York, said in reference to the relatively unimpressive movement in AMI stock following the new offer.

In trading on the New York Stock Exchange, AMI closed at $19.375, up 25 cents.