‘White Knight’ Kelso Trips Up Black & Decker : American Standard OKs Firm’s Higher Bid

American Standard Inc., targeted for takeover by Black & Decker Corp., said Thursday that it had agreed instead to be acquired by Kelso & Co. for about $2.53 billion.

Kelso, a private investment bank firm that specializes in leveraged buyouts, will start the $78-per-share cash tender offer for all of the common stock of the plumbing fixtures and air-conditioning company by today or Monday, a spokeswoman said.

American Standard’s shares rose 87.5 cents to $76.375 Thursday.

Black & Decker, a Towson, Md.-based manufacturer of power tools and other household products based, had planned to issue a statement Thursday but later said it would make one today. News that American Standard found its “white knight” in Kelso sparked speculation that Decker would bow out of the bidding.

Black & Decker shares rose $1 to $19.50.

“If they (Decker) say they’re getting out, the stock will go up $3,” one Wall Street trader said.

“I strongly believe Black & Decker will walk away from the American Standard acquisition,” said analyst James Wei of Tucker Anthony, R. L. Day & Co.

Decker would not confirm a published report that it raised its offer for American Standard to $77 per share, or $2.5 billion, from $73 per share, or $2.35 billion.

The higher price was reported by the New York Times, which quoted individuals close to the deal. “They didn’t get it from us,” said a Black & Decker spokesman of the reported higher bid.

“The newspapers said Black & Decker is willing to bid $77,” another Wall Street trader said. “I don’t think they’ve come this far to lose it over $1.”