Ailing Allegheny OKs Buyout by First Boston : Consumer Products Firm Backs $500-Million Deal; Analyst Suspects 3rd Party Is Real Buyer

Allegheny International Inc., struggling to bolster its finances and pare its businesses down to narrow a core of consumer products, said Monday that it had agreed to a $500-million buyout by First Boston Corp.

First Boston said it would pay $24.60 cash per share for Allegheny International’s 10.8 million common shares outstanding. The announcement quickly lifted the shares from Friday’s closing price of $15.37 1/2 to a closing price of $24 in trading on the New York Stock Exchange.

First Boston said it will finance the acquisition with money borrowed against future earnings of Allegheny International. The deal hinges on the cooperation of Allegheny’s shareholders and bankers, who have placed restrictions on the company because of recent financial difficulties.

“The plan is to run it along the lines that AI management chooses,” said Monica Prihoda, spokeswoman for New York-based First Boston.

The buyer will also pay $20 per share, or $56 million, for 2.8 million shares of $2.19 cumulative preferred stock and $87.50 per share, or $166 million, for 1.9 million shares of $11.25 convertible preferred stock.

Securities analyst Gregory Drahuschak, who follows Allegheny for Butcher & Singer Inc. in Pittsburgh, said First Boston may be acting on behalf of an unidentified buyer.

Oliver S. Travers, who replaced embattled Allegheny Chairman Robert J. Buckley last August, will remain chairman, president and chief executive. Thomas J. Albani will remain chief operating officer, said company spokesman Edward M. Romanoff.

Allegheny managers may participate in the leveraged buyout, Prihoda said.

The company owns a variety of industrial and high-technology businesses, but makes three-quarters of its annual sales through consumer products units, Sunbeam, Oster, Wilkinson Sword, Almet-Lawnlite, Hanson Scale and Northern Electric.

Its earnings have been in a nose-dive since 1981.

The company said Monday that its fourth-quarter operating loss widened to $151 million on revenue of $346 million from $38 million on revenue of $392 a year earlier. The net loss for the fourth quarter was $166 million, compared to $53 million.