Koppers Studying Options to Avert Takeover Attempt
Embattled Koppers Co. said Wednesday that it was studying a cash payout to shareholders, asset sale or employee stock ownership to battle a takeover attempt by a British investor and a New York investment bank.
But before Koppers details the recapitalization options under study, the Pittsburgh construction materials and chemicals company likely will launch a publicity campaign criticizing investment banker Shearson Lehman Hutton Inc., according to one securities analyst.
“I would expect the first thing you’ll see . . . will be some newspaper advertising that will peel the hide off Shearson,” said Donald A. Pattison of Cyrus J. Lawrence Inc. of New York.
Pattison said Shearson is vulnerable to criticism for owning 46% of BNS Inc., the company, formed with British investor Brian Beazer, that launched the $45-a-share, $1.3-billion tender offer March 3.
Shearson’s equity participation is a more aggressive variation of investment bankers’ traditional role as adviser and financier in hostile takeovers.
Koppers alleged in a federal lawsuit filed March 11 that Shearson violated disclosure requirements of securities laws and that it offered to sell Koppers its services defending the company against hostile takeovers after laying plans with Beazer to raid the company.
No Timetable Set
Pittsburgh filed suit in federal court Wednesday alleging that Shearson, as underwriter of city bonds, violated its duty not to do anything to hurt the Pittsburgh economy, said David Welty, spokesman for Mayor Richard Caliguiri.
Under Beazer’s plan to sell Koppers’ chemical business, about 1,100 jobs could disappear in Pittsburgh, city officials contend.
Caliguiri also ordered city department heads to exclude Shearson from consideration as an underwriter of future financing, Welty said.
A Koppers spokesman said the board set no timetable for settling details of any recapitalization offer.
“The question is what’s it worth” to shareholders, said securities analyst Gregory Drahuschak of Butcher & Singer of Pittsburgh.
Pattison said he expects Koppers to defeat the tender offer through the lawsuit and an offer to common shareholders of cash and securities worth up to $60.
“I don’t see a third party out there that would be a competitor to Beazer,” said Drahuschak.
Stock Closes Down
Pattison, however, said aggregates, the crushed stone used in roadbeds and mixed with cement to make concrete, are tightly controlled in Britain, enhancing interest in U.S. producers like Koppers. The weak U.S. dollar and accounting rule differences in Britain and the United States might also attract other bidders for Koppers.
“Koppers’ board believes that the company remaining independent would, over the long term, be a superior alternative to accepting the BNS offer,” which is inadequate, the company said.
Koppers common stock jumped $2.75 a share Tuesday to $54.50 on the New York Stock Exchange, apparently in anticipation of Wednesday’s deadline for the company to respond to the tender offer. The announcement sent the stock down 87.5 cents to $53.625 Wednesday in heavy trading.
Koppers Chairman Charles R. Pullin said management will explore the possible sale of an equity interest in all or part of the construction materials and services business or portions of the business and the proceeds used to sweeten the payments to shareholders.
Beazer has said BNS probably would sell Koppers’ chemicals business if it gained control.
The BNS offer of $107 for each preferred share is adequate, Koppers said, while declining to advise holders whether to tender their stock.
Koppers said it is being advised by the First Boston Corp.
