Earlier Offer for Santa Fe Southern Disclosed
Henley Group approached Santa Fe Southern Pacific last month about forming a “business combination” but was rebuffed, according to an SEC filing Henley made Thursday in connection with a proposed buyback of 25 million of its shares.
Henley officials declined to elaborate on the sort of combination it had in mind with the railroad holding company, but analysts inferred from the disclosure that Henley wanted to merge all or some of the two companies’ operations. An SFSP spokesman declined to comment on the filing, saying the company had not yet received a copy.
La Jolla-based Henley said in Thursday’s filing that it originally bought just over 5% of SFSP’s stock in 1986 for investment purposes only. But Henley “re-examined its position” following the April resignation of SFSP Chairman John J. Schmidt and informed the com1885433465SFSP to help it increase stockholder values.”
The disclosure follows Henley’s announcement Tuesday that it is seeking federal approval to raise its stake in SFSP to 24.9% of shares outstanding. Henley Chairman Michael D. Dingman earlier this week declined to say whether Henley is interested in taking over the Chicago-based concern.
Mark Hassenberg, vice president at the Donaldson, Lufkin & Jenrette investment house in New York, said Henley’s overtures to SFSP were a strong indication that Henley “either wants a merger or an agreement whereby (Henley) would be happy to take a portion of Santa Fe in exchange for its shares.”
Henley’s SEC filing was made in connection with its offer to buy up to 24% of its own shares at $28 each. That offer commenced Thursday and is scheduled to expire Aug. 19. Henley also discl1869833572part of a settlement of a shareholder lawsuit filed against Henley and its officers last year. In the suit, shareholders alleged that a stock purchase plan for Henley executives that involved low-interest loans provided by the company for 90% of the stock purchase price constituted a “waste of corporate assets.”
Terms of Henley’s settlement of the shareholder lawsuit also call for Henley to reduce the length of the loans to the participants and to reduce the number of shares available to them.
Henley also said in the filing that it is “actively considering” spinning off its General Chemical Corp. business unit to the public.
