Hanson Trust to Acquire Kidde Inc. in $1.6-Billion Deal
Britain’s Hanson Trust PLC announced an agreement Wednesday to acquire Kidde Inc. for $1.6 billion in cash and stock rights, capping months of speculation that had pegged the diversified U.S. company as a takeover target.
The friendly deal is a slight departure for Hanson Trust, the giant conglomerate whose biggest deals have included hostile takeovers of SCM Corp. and Britain’s Imperial Group PLC.
Although the merger included provisions for the possible spinoff of the Saddlebrook, N.J.-based firm’s temporary employment services unit to shareholders, Hanson indicated that it had no immediate plans to sell any of Kidde’s myriad consumer and industrial lines, which include Jacuzzi whirlpool baths, Farberware cookware, Universal gym equipment and Kidde fire extinguishers.
“The acquisition of Kidde fits perfectly with Hanson’s strategy of operating basic businesses which meet essential human needs,” said Sir Gordon White, chairman of Hanson Industries, the conglomerate’s U.S. division.
White also said that Fred Sullivan, Kidde’s chairman and president, had agreed to retain that post after the merger.
Under the definitive agreement, Kidde shareholders would exchange each of the company’s 26.7 million common shares outstanding for $60.10 in cash and a seven-year warrant allowing them to buy one Hanson Trust American Depositary Receipt--representing five Hanson shares--for $18.
Kidde also granted Hanson Trust the option to purchase up to 25% of Kidde’s outstanding shares for $63.875 a share, under certain circumstances. Such options usually are granted to discourage competing offers.
The buyout is conditioned on a majority of Kidde shares being tendered to Hanson and is subject to approval by government regulators and Hanson shareholders.
Kidde shares jumped $2.25 a share to $66.125 on the New York Stock Exchange. Hanson Trust American Depositary Receipts rose 62.5 cents to $15.125. On the London Stock Exchange, Hanson shares rose 4 pence, about 6.3 cents U.S., to 1.845 pounds, or about $2.915 U.S.
The stock price of Kidde traded in the mid-$30 range in early June before soaring on takeover speculation and on Kidde’s announcement in July that it was considering a buyout or restructuring.
Wall Street speculation was that Kidde considered itself undervalued and was seeking to avoid an unwanted takeover either through a friendly suitor or a restructuring that would boost its share price.
In addition, analysts said, Kidde probably was driven by uncertainty over the fate of Argonaut Group Inc., which holds 12% of its stock. Argonaut is the target of a hostile takeover.
A company spokesman said Kidde had no comment beyond the news release announcing the deal.
Plans Uncertain
Hanson, with a range of interests that include building equipment, consumer and industrial products and food processing, declined to say whether it had been approached by Kidde.
Hanson spokeswoman Karen Levy said it was too early to determine whether any Kidde lines would be sold, although Hanson’s past strategy following acquisitions has been to divest businesses that were unproductive or fetched a good price.
In March, Hanson completed the friendly acquisition of Kaiser Cement Corp. of Oakland for about $250 million, but in its biggest deals Hanson has been predator rather than savior.
Hostile History
Hanson acquired SCM for $930 million in March, 1986, following a months-long, bitter takeover battle against an investor group led by Merrill Lynch & Co.
Hanson later raised more than $900 million by selling most of SCM’s major units, while retaining its Smith Corona typewriter business and profitable industrial pigments unit.
Later last year, Hanson won a hostile $3.9-billion takeover fight for Imperial Group, the giant British food, tobacco and brewing conglomerate, and raised money from the sale of Imperial’s Courage brewing operation and its leisure products businesses.
Carol Neves, who follows both companies for Merrill Lynch, said that aside from Kidde’s lighting and office products businesses, which were good fits with existing Hanson units, much of the firm’s lines were likely to be up for sale.
“A lot of them are attractive, because in almost every case they are leaders in their niche of business,” she said.
Hanson also said Kidde might spin off the stock of Kidde Business Services Inc., its temporary employment services unit with more than 100 offices in the United States and Canada and $125 million in annual revenue.
KIDDE AT A GLANCE The Saddle Brook, N.J.-based company manufactures a broad range of consumer, safety and industrial products, including Farberware cookware and appliances, Progress lighting fixtures, Jacuzzi whirlpool baths and water systems and Tommy Armour Gold Products.
6 mos. Year ended Dec. 31 Mar. 31 1987 1986 1985 Revenue (billions) $1.35 $2.36 $2.16 $2.09 Net income (millions) 28.2 52.2 47.6 57.2
Assets $1.7 billion
Employees 38,000
Shares outstanding 26.7 million
12-month price range $28.375 - $66.250
Wednesday close (NYSE) $66.125, up $0.25
