Management to Buy Ward From Mobil
Mobil Corp., the nation’s second-largest oil company, announced today that it has finally decided the fate of its Montgomery Ward & Co. subsidiary and will sell the Chicago-based retailer to the unit’s management for about $3.8 billion.
Meanwhile, General Electric Co. launched a surprise $45-a-share tender offer for appliance maker Roper Corp. that eclipses the $37.50-a-share offer from Whirlpool that Roper had already accepted, giving a sharp lift to its shares. For GE, the $420-million deal would be the third major acquisition in two years, following Smith Barney and RCA.
David R. Whitwam, Whirlpool’s president and chief executive, said in a statement that Whirlpool remains committed to acquiring the home appliance maker.
Also today, Italian tire maker Pirelli offered $1.9 billion for Firestone Tire & Rubber Co. and urged Firestone stockholders to reject a $1-billion agreement to sell 75% of Firestone to Japan’s Bridgestone Corp.
Two-Thirds of Shares
Pirelli said its offer was conditioned on acquiring at least two-thirds of Firestone’s shares; on the agreement between Firestone and Bridgestone not being signed, and on the removal of Firestone’s anti-takeover defenses.
Mobil said in a statement that the management investor group would pay more than $1.5 billion in cash for Montgomery Ward, the nation’s eighth-largest retailer, and assume $2.3 billion of its debt.
It has been reported for some time that Montgomery Ward President Bernard F. Brennan--who is credited with turning the retailer around in recent years--was negotiating with Mobil to acquire the 115-year-old department store company that Mobil bought in 1976.
Brennan said in the statement issued by Mobil that GE Capital Corp., a unit of General Electric Co., was a substantial investor in the leveraged buyout.
Mobil Stock Jumps
“It’s a business that we don’t know too well,” and the oil company believed it would be better to concentrate on its core businesses, said Mobil Chairman Allen E. Murray.
Mobil stock jumped $1 to $44.62 1/2 in early New York Stock Exchange trading today.
Montgomery Ward lost money in the early 1980s but under Brennan has restructured and returned to profitability. The company laid off employees, closed its Jefferson Ward discount stores and other unprofitable branches and shut down the catalogue division that dated back to the company’s early days.
At the same time, it has moved into specialty retailing. Montgomery Ward has begun opening free-standing appliance and electronics stores, and is converting its department stores to emphasize specialty formats including electronics, home furnishings and recreational items.
