Wynn’s Gets $109-Million Offer From Investor Group
Wynn’s International, for months considered a prime takeover target, said Friday that it has received an unsolicited, $109-million buyout bid from a group of investors led by Security Pacific’s venture capital unit.
The offer for the Fullerton-based automotive products supplier works out to $27.25 a share for Wynn’s 3.8 million common shares outstanding.
News of the offer caused Wynn’s stock price to soar $9.50 a share on the New York Stock Exchange, closing Friday at an all-time high of $28.875 as traders rushed to cash in on what analysts agree is likely to become an even sweeter offer.
The possibility of a higher bid is especially strong because the Security Pacific group put its offer together after learning that Wynn’s management has been developing a leveraged buyout offer.
John Lillicrop, Wynn’s president and chief executive, is leading the management group that wants to take the company private through a buyout, company and investment community sources said. “Security Pacific heard about it and decided to do likewise,” a spokesman said.
Lillicrop could not be reached for comment Friday.
Earnings Record ‘Spotty’
Wynn’s is best known as a maker of automotive engine additives, but auto air-conditioning systems last year accounted for $190 million of its $306 million in sales. The additive business also has been strong, adding $50 million to $60 million to gross sales, according to Tichy.
The company also makes industrial chemicals, rubber seals for cars and industrial use and builders’ hardware.
One reason Wynn’s is considered a takeover candidate is its spotty earnings record, which has caused the company’s stock to be undervalued for some time, said William D. Tichy, an analyst in San Francisco with Dean Witter Reynolds.
Net income from continuing operations has plunged 48% for the first six months to $1.5 million from $2.9 million a year earlier--partly because Mazda significantly cut its purchases of Wynn’s auto air conditioning units after building its own plant, Tichy said.
In 1986, the company earned $6.2 million on sales of $306.1 million.
As of Dec. 31, the company listed its book value at $81.6 million. Wynn’s long-term debt was a “manageable” $40.3 million and the company had equity of $78.7 million, Tichy said.
Considering Wynn’s book value and last year’s sales of almost $80 per share, the Security Pacific group’s offer of $27.25 per share “looks low . . . My guess is the stock has been put into play and the final chapter hasn’t been written,” said Tichy.
But W. E. Bellwood, Wynn’s chairman and one of four members of an independent committee set up to consider Security Pacific’s offer, described the bid as “not an unfriendly tender. We’ve supplied them with confidential information and they’ve agreed not to make an unfriendly offer.”
The seven-member board will study the proposal and retain an investment banker by next week to help evaluate it, Bellwood said.
Security Pacific’s offer is subject to various conditions, including arranging debt financing for the transaction.
WYNN’S INTERNATIONAL AT A GLANCE
Fullerton-based Wynn’s International makes automotive engine additives, auto air conditioners, builders’ hardware, locksmith supplies and automotive and industrial sealing devices. The company, whose products are distributed worldwide, has subsidiaries in several states and foreign nations. For the first half of 1987, Wynn’s reported revenue of $147.7 million and net income of $1.5 million.
Results from continuing operations:
(in millions) 1986 1985 1984 1983 Revenue $306.1 $207.1 $191.5 $174.9 Income (loss) 10.5 5.8 9.1 (0.4)
Assets $183.4 million Employees 2,233 Shares outstanding 3.8 million 52-week price range $16-$28 7/8 Friday’s close (NYSE) $28.875, up $9.50
