Briton Withdraws $2-Billion Bid for Harcourt
British publisher Robert Maxwell on Thursday withdrew his $2-billion bid for Harcourt Brace Jovanovich but stirred new speculation about his declared desire to acquire a U.S. publisher by saying he continues to “review alternatives.”
With Maxwell’s midday announcement, the stock of textbook publisher Macmillan rose to a record high of $60.25 a share on the New York Stock Exchange before easing off to a close of $59.125, up $1.875. But analysts said the chairman of British Printing & Communications Corp. may next turn his attention to any of a number of U.S. publishing and printing firms.
In a terse statement, Maxwell said he withdrew the 10-day-old offer because of the drastic restructuring plan that Harcourt approved on Tuesday in an effort to avert a takeover. The withdrawal represented an unusual setback for Maxwell, who usually has prevailed in such takeover fights and who was the target of unusually strong words by Harcourt Chairman William Jovanovich.
“It’s got to be hard to be just bowled over like this in public,” said John Reidy, an analyst with Drexel Burnham Lambert.
While Maxwell did not exclude the possibility of a higher offer for Harcourt, analysts doubted that he would resume the bitter takeover fight because of the strength of Harcourt’s defense.
Harcourt, which has interests in insurance and amusement parks in addition to publishing, plans a restructuring that will add nearly $3 billion in debt and place more than 30% of its stock in friendly hands. The company will pay a special dividend of $40 a share in cash and a fraction of a share in preferred stock, a package analysts value between $50 and $55 a share.
The plan not only makes the company far less desirable because of the heavy debt but makes it unlikely that Maxwell could win the 70% majority of shareholder votes required for a takeover under New York state law, said J. Kendrick Noble, analyst with Paine Webber. Harcourt is chartered in New York, though its headquarters are in Orlando, Fla.
Harcourt’s financing for the restructuring was arranged under contracts stipulating that the debt could be called, upon a change of control, he said. “They really covered all the bases,” Noble said.
Robert S. Pirie, chief executive of Rothschild Inc. and Maxwell’s financial adviser, did not return telephone calls seeking elaboration on his plans. Macmillan officials also did not respond to requests for comment.
Maxwell has said publicly that he would like to purchase a U.S. publishing firm, and his rebuff revived speculation as to which publishers or printing companies might next attract his interest.
The stocks of a range of publishers have risen in recent weeks, not only because of Maxwell’s bid, but also because of this spring’s lively bidding contest for Harper & Row, which ended with that firm’s acquisition by Rupert Murdoch.
Among those mentioned as possible takeover targets--by Maxwell or others--have been textbook publishers Houghton Mifflin, Addison-Wesley Publishing, John Wiley & Sons and McGraw-Hill. The names also have included Grolier, an encyclopedia and textbook publisher, and such printing companies as George Banta Co.
But analysts said a number of these concerns--including Addison-Wesley, Macmillan, Wiley and McGraw-Hill--could strongly resist a takeover, either because they have issued two classes of stock, or because ownership of their securities is concentrated among family members. For that reason, some analysts speculated that Maxwell may shift ground and try to work out a friendly deal privately, rather than go ahead with another uninvited public bid.
Maxwell “seemed to be unwilling to go to the mat in a takeover fight, so now he may try to offer the kinds of deals management might be amenable to,” said Drexel’s Reidy.
