Bilzerian Launches $1.08-Billion Bid for Singer
A $1.08-billion unsolicited offer for Singer was made Monday by Florida investor Paul A. Bilzerian, who disclosed last Thursday that an investor group he leads had purchased nearly 10% of the aerospace firm’s stock.
The offer was the first significant hostile acquisition effort since the stock market crashed two weeks ago. Some analysts said after the plunge that it would be likely to slow the rate of mergers and acquisitions in the United States, particularly those financed with high-yield “junk” bonds.
Bilzerian, who has been unsuccessful in several earlier takeover attempts, said in a telephone interview that his proposed acquisition of Singer would not involve any high-yield bond financing, and he predicted that a flurry of acquisition activity will develop in the next three months.
The combination of lower share prices and, in some cases, lower interest rates makes hostile bids more, not less, attractive, he said.
“The decline has made values a little bit better, but the market has been sufficiently disrupted that financing is more difficult,” he said. “These deals are definitely going to receive more scrutiny.”
Offers $50 a Share
Bilzerian said the $1.08-billion acquisition of Singer would be financed with $100 million put up by his partnership, $150 million from the sale of preferred stock to an affiliated partnership, $355 million in senior preferred shares that Shearson Lehman Bros. has already said it will buy and $540 million of senior bank debt.
At his $50-a-share offer, Bilzerian is offering a substantial premium over the recent low price of below $30 per share. However, Singer shares closed Monday on the New Stock Stock Exchange at $47.25, up $3.125.
Singer advised shareholders Monday to wait until it completes a review of the offer by Nov. 16. Singer Chairman William F. Schmied said in a statement that the board will promptly start its review with its financial and legal advisers.
Self-Financing Deal
Bilzerian also said in the interview that if he is successful in acquiring the Montvale, N.J., company, he would consider selling Singer’s defense business, which accounted for 80% of the firm’s $1.7 billion in 1986 revenue.
Such a sale could make the Singer deal virtually self-financing, analysts said. But at the same time, a number of defense contracting units are on the block without any takers, according to Robert Hanisee, analyst at Seidler Amdec Securities of Los Angeles.
“There seems to be a glut of defense companies on the market right now,” Hanisee said. “Gould has been trying to sell its defense business for a year and Eaton just announced it wants to sell its defense business. I don’t see buyers lined up.”
Some high-quality defense electronics firms have sold at prices equal to annual sales volume, Hanisee noted. Singer had aerospace sales of $1.4 billion in 1986. Even at a lower price ratio, the aerospace operations would cover the $1.08-billion acquisition cost.
If Bilzerian does sell Singer’s defense businesses, the company would be left with its power tool subsidiary, which makes Craftsman tools for Sears, Roebuck, and a unit that manufactures utility meters.
TOP 10 DEFENSE CONTRACTORS
1986 revenue Company $ in billions General Dynamics 8.0 General Electric 6.8 McDonnell Douglas 6.6 Rockwell International 5.6 General Motors 5.1 Lockheed 4.9 Raytheon 4.1 Boeing 3.6 United Technologies 3.5 Grumman 3.0
Source: Defense Department
