British conglomerate Hawley Group PLC said Monday that it offered to acquire Parsippany, N.J.-based ADT Inc. for $620.4 million, or $47 a share, in a move that would increase its share of the U.S. market for electronic security systems.
ADT is the leading U.S. supplier of these systems. On news of the merger offer, ADT's stock rose $14.50 a share to $48.75 in New York Stock Exchange trading--the biggest dollar and percentage gainer of the day. There are 13.2 million shares outstanding.
The offer adds to a growing list of transatlantic takeover bids by British firms, which have been riding the fortunes of a recent stock market boom and are brimming with excess cash. The total value of bids this month alone totals more than $4 billion.
Hawley is the leading contract cleaning and hospital service group in Britain and Australia and is second in the United States, where it also operates a security alarm service.
ADT, which until last year was called American District Telegraph Co., supplies everything from burglar alarms to smoke detectors. In 1986, the company earned $23.2 million on sales of $519.2 million.
Officials at ADT's headquarters did not return phone calls on Monday.
Wall Street analysts attributed the steep rise in ADT's stock to speculation that Hawley will raise its offer, although they did not see much room for major escalation in bidding. One arbitrager said he believed that ADT is worth $50 per share at most.
"Hawley has made a fair offer. They apparently did their homework first," said Gary Schneider, analyst at Bear, Stearns & Co.
Hawley's offer continues the recent invasion of U.S. shores by British firms eyeing the country's huge markets. British glassmaker Pilkington PLC agreed Monday to acquire Revlon Group Inc.'s Vision Care contact lens business for about $574 million.
Earlier this month, Blue Arrow PLC, one of Britain's largest employment agencies, bid $1.2 billion for Manpower Inc. The Milwaukee-based company rejected the offer this weekend.
Schneider said that if ADT wanted to avoid a takeover by Hawley, it will probably have to find a "white knight" to aid it in fighting off the British company. "I do not believe that it is a candidate for a leveraged buyout," he said, noting that ADT does not have sufficient cash flow to pay off the heavy debt used in leveraged deals.
Hawley's offer would be financed partly by the proceeds of a preference share issue and by bank facilities together with Hawley's own resources. The proposed stock issue consists of $400 million worth of redeemable preference shares that are convertible into Hawley common shares.