GAF Receives $2.3-Billion Buyout Offer : News of Chairman’s Bid Propels Price of Stock Up $12.25

GAF Corp. Chairman Samuel Heyman on Tuesday launched a $2.3-billion bid to take the chemical company private through a leveraged buyout, using some of the millions it has earned through unsuccessful but profitable takeover bids for much larger companies.

The offer, at $66.50 a share, sent the diversified chemical company’s stock soaring. It closed up $12.25 at $66.75 in consolidated New York Stock Exchange trading and was the day’s biggest point gainer.

Heyman said one of the main reasons for the bid was a desire to operate as a private company.

“It will afford us the opportunity to concentrate our full attention on long-range objectives for the company, free from the constraints normally associated with continued public ownership,” he told Reuters.

GAF began to build up a huge bankroll when it failed in 1985 to take over Union Carbide Corp. in a $5-billion offer. While the bid failed, GAF made a $200-million profit as its holdings gained value in a Carbide restructuring.

The Heyman offer amounts to a management-led buyout with other key managers also participating in the deal, which would turn GAF into a privately held company.

Would Add to Debt

Under the offer, each GAF shareholder would receive $64 cash and $2.50 worth of debt securities for each share they own.

In common with most leveraged buyouts, the proposed deal would leave GAF with added debt. Such deals have become increasingly popular because the spinning off of some units and even the floating of the new company back to the public have often left the buyout group with huge profit.

Heyman told Reuters that the takeover would be financed with high-yield bonds marketed by Merrill Lynch and Drexel Burnham Lambert.