Market Delivers Blows to Takeover Specialists
A group led by millionaire Texan Robert M. Bass disclosed on Thursday that it has amassed a 7.5% stake in Macmillan Inc., the New York textbook publisher, but it has already taken a stunning $28.37-million paper loss on its investment.
Bass, regarded on Wall Street as a shrewd investor, started buying Macmillan shares on Aug. 21, when the book publisher’s shares traded at around $72. This week’s dramatic plunge in the stock market hammered Macmillan’s share price down to $53 in trading on the New York Stock Exchange on Thursday, handing the Bass group paper losses of about $15 per share.
A spokeswoman for the Robert M. Bass Group in Fort Worth said it had no comment on its investment in Macmillan. In New York, David R. Jackson, Macmillan vice president for investor relations, had no comment.
Robert A. Dunlap, a publishing industry analyst with Brown Bros. Harriman in New York, said Macmillan was an attractive investment. He said the firm controls about 25% of the school textbook market and should do well as the number of school children in the United States grows. According to Dunlap, the textbook market should grow from $1.7 billion last year to $2.6 billion in 1992.
Dunlap said that Macmillan has also developed its electronic information services business, which should have sales of about $235 million this year, up from “practically nothing” in 1980.
According to a filing with Securities and Exchange Commission, the Bass group purchased its stake in Macmillan as an investment.
The decline in stock prices delivered a blow to another prominent stock investor, Alan E. Clore. Clore disclosed in a SEC filing Thursday that he was in default on various loan agreements because of the market’s record plunge.
As a result, Clore said he was forced to sell some of the 11 million shares in Oakland-based KaiserTech that he had pledged as security against those loans, and is holding negotiations over the possible sale of the rest of his KaiserTech holdings. Clore became chairman of KaiserTech earlier this year after amassing a 31% stake in the aluminum processor in a messy takeover battle.
Separately, another firm, the Rorer Group, said it would buy back 1.12 million of its shares from Clore, who had said in August that he might try to take over the Fort Washington, Pa., drug company.
But another corporate takeover specialist, Asher B. Edelman, got a boost Thursday when Telex Corp. stockholders went to court to force the company’s directors to negotiate with him. Telex’s board said on Wednesday that it couldn’t take a position on Edelman’s $65-a-share offer for the Tulsa, Okla., firm whose shares were trading in the $45 range on Thursday.
Meanwhile, dozens more corporations on Thursday continued to react to depressed share prices with new stock repurchase programs. Northrop said it might spend up to $200 million to repurchase shares. First Interstate Bancorp said its board authorized the repurchase of up to 3 million shares and Cineplex Odeon Corp., which is half owned by MCA, said it planned to redeem its preferred shares and repurchase up to 2 million common shares.
Other firms announcing share buyback programs on Thursday were Pepsico, which said it was authorized by its board to buy up to 15 million shares; Union Carbide, which said it might buy up to 10 million shares; Raytheon, which may buy back up to 5 million shares, and Delta Air Lines, which said it might buy up to 5 million shares.
According to analysts and various corporate executives, firms are buying back shares because they view them as good investments at this week’s depressed prices.
Staff writer Nancy Rivera Brooks also contributed to this story.
