AFG to Move Headquarters From Irvine to Ft. Worth; Central Location Is Cited
AFG Industries, the highly profitable glass manufacturing firm that has called Orange County its home for the past four years, is moving its corporate headquarters from Irvine to Ft. Worth.
The move, expected to take place at the end of the month, will have little impact on Orange County aside from a possible blow to its image as a prime business location. AFG employs only 14 people in Orange County, all of them top corporate officials.
AFG attorney Mark Hanson said the company is moving its corporate offices to Ft. Worth because the city has a major airport and is more central to the company’s operations.
AFG has 6,000 employees and 12 major factories and distribution centers in nine states. In January, it acquired a Ford Motor Co. glassmaking operation in Canada.
Aside from its small headquarters in Irvine, AFG’s only other California facility is a glassmaking plant in Victorville that began production late last year.
R.D. Hubbard, AFG’s founder and chairman, moved the headquarters to Irvine from Kingsport, Tenn., in 1984.
AFG has already leased 7,000 square feet of space in a downtown Ft. Worth office building owned by that city’s wealthy Bass family.
A real estate agent who is handling the relocation told the Fort Worth Star-Telegram that Hubbard recently signed a contract for a home, valued at more than $1 million, in the city’s ritzy southwestern area.
A receptionist at AFG’s Irvine offices said Thursday that no corporate officers were available for comment because all were traveling. Several reportedly were in Ft. Worth looking for housing.
The move to Texas coincides with Hubbard’s $940-million bid to take AFG private by acquiring it through his newly formed company, Clarity Industries.
Clarity notified the Securities and Exchange Commission late Wednesday that it had obtained a commitment from a Belgian company, Glaverbel S.A., for $150 million in cash to help finance the acquisition bid.
In addition, a stock analyst who follows AFG said Thursday that he has received assurances from several major banks that they are providing loans to Clarity to help finance the acquisition.
Hubbard apparently cleared another takeover hurdle Wednesday evening by resolving a consolidated lawsuit filed on behalf of AFG shareholders who oppose the buyout. Filed in Delaware, where both AFG and Clarity are incorporated, the suit challenges Hubbard’s initial offer to acquire only 26.8 million of about 28.5 million AFG shares outstanding and to convert unacquired shares into redeemable preferred stock in Clarity Holdings.
The settlement, said Mark Hanson, AFG associate general counsel, calls for Clarity to tender for all of AFG’s outstanding shares and to exchange those shares not acquired through the tender into $33 cash rather than into preferred shares. Additionally, Hanson said, Clarity has extended the expiration date of its tender offer from March 28 until “at least April 1.”
Hubbard formed AFG in 1978, when he merged two small companies, Fourco Glass Co. of West Virginia and AFG Industries of Tennessee. The two companies were manufacturers of flat glass--used for windows and windshields--but Hubbard launched an expansion program that brought AFG into the specialty glass field and modernized its aging plants.
In addition to its original facilities in Tennessee, New Jersey and West Virginia, AFG has glassmaking factories in Canada, in Victorville and near Kansas City, Mo. It also owns glass fabricating facilities in Georgia, Indiana, Tennessee and Pennsylvania, and distribution facilities in Georgia and Texas.
Since 1978, when the company posted a profit of $1.8 million, AFG’s earnings have grown at an annual average rate of 23%. For 1987, AFG reported sales of $488.4 million and a profit of $81.7 million.
AFG common shares, traded on the New York Stock Exchange, were selling at about $10 per share when the company left Tennessee. It hit a high of $38.125 per share last year and closed Thursday at $32.375 a share.
Hubbard made more than $40 million for AFG in 1986 and 1987 with unsuccessful bids to acquire Lear Siegler and GenCorp. The profits came when AFG sold to the successful bidders, at substantial markups, the huge blocks of Lear Siegler and GenCorp stock it had acquired.
Ironically, Hubbard’s bid for AFG initially was challenged by the New York investment firm of Forstmann Little & Co., which outbid AFG and its partner for Lear Siegler in 1986.
But Forstmann Little--which said it was prepared to top Hubbard’s cash offer of $33 per share for AFG--dropped out last week, apparently deciding that Hubbard and other key management officials would leave the firm if they could not buy it themselves. Without the current management, several stock analysts said, AFG would not be worth the investment Forstmann Little would have to make.
A Frequent Visitor
When he moved AFG’s small corporate staff to Irvine in 1984, Hubbard said the reason was to give the fast-growing firm more exposure to the investment community.
But Orange County also apparently attracted Hubbard because of its climate and life style. Hubbard was already a frequent visitor to the Southland--he has owned a home in Palm Desert since 1974 and owned a number of quarter horses that frequently raced at California tracks.
Hubbard purchased a waterfront home in Newport Beach in 1986 for a reported $1.8 million and maintained a large yacht there.
Since his move to Orange County, Hubbard has begun racing thoroughbreds as well as quarter horses and has become part owner of Cypress-based Quarter Week magazine, which covers the quarter-horse scene.
While the official reason for the move to Texas is that it is more central to AFG’s operations, Larry Selwitz, an analyst with Bateman Eichler, Hill Richards in Los Angeles, said that Hubbard apparently has business ties there and no longer will be as concerned with proximity to the investment community once the company is private.
Additionally, Texas has just approved pari-mutuel betting and is establishing a racing commission that will process applications to build horse-racing tracks in the state.
Hubbard, 51, is known to be interested in track ownership. In 1987, he headed an investor group that unsuccessfully bid $40 million for Los Alamitos Race Course.
Hubbard’s business connections in Texas stem from his attempts to acquire Lear Siegler and GenCorp. AFG’s partner in both attempts was the Midland, Tex., oil and gas firm of Wagner & Brown.
AFG INDUSTRIES AT A GLANCE Irvine-based AFG is the second-largest maker of glass in the United States, with manufacturing facilities in Victorville, Calif., Tennessee, New Jersey and West Virginia. The company has a plant under construction near Kansas City, Mo. It recently purchased Ford Motor Co.’s non-automotive glass operation in Canada.
Year ends Dec. 31
(in millions) 1987 1986 1985 1984 1983 Revenue $488.4 $405.9 $320.0 $281.9 $213.7 Net income $81.7 $62.9 $21.1 $18.1 $14.1
Assets $519.7 million Number of employees 6,000 Shares outstanding 30 million 52-week price range $38.125-$21 Thursday’s closing price (NYSE) $32.375, up 37.5 cents Chief executive R. D. Hubbard
