3-Way Bidding Battle Erupts for J. P. Stevens : Pepperell, Unidentified Suitor Jump Into Fray

A bidding war erupted for textile giant J. P. Stevens & Co. on Tuesday, with rival West Point-Pepperell Inc. offering to buy the company for about $867 million in cash and a management-led group jumping its cash and securities offer to about $850 million.

Stevens also disclosed that it had received a third, unidentified offer.

Stevens’ stock closed up $6.25 a share at $54.50 on the New York Stock Exchange. West Point-Pepperell was unchanged at $30.50 a share.

Stevens announced that the management group headed by Chairman Whitney Stevens had offered to pay $40 in cash and $15 in securities for each of the company’s 15.5 million common shares outstanding in a leveraged buyout.

The group, led by the fifth generation member of the family that founded Stevens in 1813, initially offered on Feb. 8 to pay a total of $43 a share in cash and securities, or about $666.5 million.

Shortly after Tuesday’s announcement, West Point-Pepperell revealed that it had offered to acquire Stevens for $56 a share in cash under a negotiated merger agreement.

West Point said the transaction was not conditioned on the availability of financing and indicated that it was considering the sale of certain Stevens’ assets to avoid antitrust concerns.

Expected Higher Bids

Stevens indicated in a news release that its outside directors were reviewing the revised management proposal and had authorized the company’s financial advisers to study the two outside proposals.

Jim Franklin, a spokesman for Stevens, declined to comment beyond the news release. Donald Downes, a spokesman at West Point-Pepperell’s headquarters in West Point, Ga., also said he could not elaborate on his company’s brief statement.

A number of industry experts had predicted that higher offers would emerge following the management group’s initial offer, which widely was viewed as too low.

Stevens is one of the nation’s biggest textile producers, concentrating on home fashion textiles such as sheets, towels and carpets under the brand names Ralph Lauren, Laura Ashley and Pierre Cardin. The company also makes automotive products and industrial fabrics.

West Point also is a major household fabrics maker, producing brands such as Arrow, Martex, Lady Pepperell and Cabin Crafts.

Posted a Profit

During the quarter ended Jan. 30, Stevens posted an after-tax profit of $12.9 million, up from $11.9 million a year earlier. Sales rose to $381.48 million from $361.67 million.

In the fiscal year ended Oct. 31, Stevens earned $56 million on sales of $1.6 billion, compared to a profit of $53.7 million on revenue of $1.68 billion in 1986.

West Point-Pepperell reported a profit of $25.5 million on revenue of $480.9 million for the fiscal first quarter, which ended Dec. 26. That was up from $20.9 million in profit and $422.7 million in revenue during the year earlier.

Stevens said the securities portion of the management group’s offer would include $10 in market value of junior subordinated debentures and $5 market value of preferred stock paying a dividend in cash or additional shares.