J. P. Stevens Accepts Buyout Offer : Private Investment Group Will Pay Almost $1 Billion

J. P. Stevens & Co., a leading producer of designer towels, linens and other textiles, accepted a nearly $1-billion cash buyout bid from a private investment group Monday, spurning offers from its own management and rival West Point-Pepperell Inc.

Analysts called the deal with the New York investment firm Odyssey Partners fair, although some said they thought the bidding could continue. In active trading on the New York Stock Exchange, Stevens’ stock jumped $5.375 a share to close at $61.125, or just under the offer by Odyssey.

Odyssey and unidentified private investors agreed to pay $61.50 in cash for each of Stevens’ 15.5 million shares outstanding, or about $953.24 million. The offer is subject to a majority of the shares being tendered and the necessary financing being obtained.

Over the past few weeks, Stevens has found itself fielding rival offers from Atlanta-based West Point-Pepperell and a group led by senior management, including Chairman Whitney Stevens, a fifth-generation member of the family that founded the company in 1813.

The management group had offered $55 a share in cash and securities in a leveraged buyout about two weeks ago, up from its original bid of $43 a share. In a leveraged buyout a company is acquired largely with borrowed money repaid with a target company’s profits or the sales of assets.

West Point-Pepperell, a major household fabrics maker whose brands include Arrow, Martex and Lady Pepperell, offered to pay $56 a share in cash, or about $867 million. The company confirmed Monday that it had considered raising the bid to $62.50 a share, but had not made a formal bid at the higher price.

The company refused to comment on what, if any, further action it might take.

But some analysts said further bidding for Stevens was possible.

“The arbitragers think there could be more bidding,” said Edward Johnson, a textile analyst with Johnson Redbook, a division of Prescott, Ball & Turben Inc.

George O. Zimmerman, an analyst with Gruntal & Co., said a higher offer would torpedo the deal with Odyssey. “I think they’ll have to take the highest bid,” he said.

Odyssey said it would finance the deal with $600 million in a loan from Citibank, $570 million from the sale of subordinated debt and preferred stock and $100 million in equity investment.

Should the deal go through, Johnson said, Odyssey likely could sell parts of Stevens to pay off its debt.

However, Deborah Bronston, an analyst with Prudential-Bache Securities, noted that Stevens undertook a major restructuring about five years ago, selling off some of its finished fabrics divisions to concentrate more on home furnishings.

New York-based Stevens, one of the nation’s biggest textile makers with 23,000 employees, produces 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 products.