Price Pfister Considers Sale to Emhart Corp.
Price Pfister Inc., a maker of brass faucets and other plumbing fixtures, is negotiating to be acquired by Emhart Corp. in a deal that would shower $140 million on the Pacoima-based company’s three main stockholders.
Emhart, with interests in industrial products, consumer goods and computer services, said it is prepared to pay $18.50 for each of Price Pfister’s 11.4 million common shares outstanding, or $211 million, and that its total investment would reach $215 million. Emhart already has entered into preliminary agreements with Price Pfister’s principal stockholders to buy about 49% of the stock, and a final agreement is expected in a few days.
“I see no reason to believe this will not go forward,” said Peter S. Gold, Price Pfister’s chairman, chief executive and biggest stockholder. Asked if other companies had expressed an interest in Price Pfister, Gold declined comment.
Price Pfister’s stock slipped $1 a share, to close at $16.50, in over-the-counter trading Tuesday after soaring $7 a share after Emhart’s announcement Monday. Emhart’s stock rose 37.5 cents, to $22.875 a share, in New York Stock Exchange composite trading Tuesday.
Third in Faucet Business
The companies said each would benefit from the proposed deal. Price Pfister’s faucets, valves and other fittings would add to Emhart’s group of construction and do-it-yourself products, which include door knobs, locks and household cements. Emhart, which had sales of $2.4 billion last year, also sells lawn and garden equipment.
In turn, Emhart would provide Price Pfister, which employs about 1,400 people, with “a very extensive distribution system in place for 50 years both in the United States and abroad,” said John Budd Jr., an Emhart senior vice president.
Although Price Pfister is a major player in the faucet business, it trails the two industry leaders, Masco Corp. and Stanadyne Inc., in sales.
Price Pfister’s sales were $117.2 million last year. Masco’s 1987 results haven’t yet been released, but in 1986 its faucet line, which includes the Delta and Peerless brands, posted sales of about $335 million. Stanadyne’s faucet unit, Moen Group, had sales of $306 million in 1987.
Emhart, in fact, made a hostile bid for Stanadyne earlier this year but was outbid by the investment firm Forstmann Little & Co., which offered $820 million for the company.
The Price Pfister announcement shows that Emhart, in pursuing Stanadyne, “liked what it saw in terms of the market and its potential and looked for another company that fit the bill,” said Richard Henderson, an analyst with the investment firm Pershing & Co.
The Emhart-Price Pfister deal would be a big relief for investors who have held Price Pfister’s stock since the company went public on July 29 at $15 a share. The stock was hammered by last fall’s market crash, dropping as low as $6 a share and recovering to only $10.50 before Emhart’s announcement.
But none would benefit as much as Price Pfister’s three major stockholders, who together own 66.5% of the company. They are Gold, who owns 29.6%; Sydney M. Irmas, a director whose family owns 28.9%, and David P. Rousso, its chief financial officer, who has a 7.9% stake.
If the deal goes through, Gold would receive $62.5 million from Emhart, while Irmas would be paid $61 million and Rousso, $16.7 million. The three already were millionaires from having taken Price Pfister public, because the 2 million shares sold included a total of 1 million sold by the three executives.
Gold, 63, joined Price Pfister as a salesman in 1956, and he plans to continue running the company if Emhart buys it. He said in a telephone interview that “money is always the motivating factor” in an acquisition, but that he also sees Emhart helping Price Pfister “prosper and grow at an even better rate.”
Although Price Pfister only recently went public, the company dates to 1910 when Emil Price and William Pfister started the company to make gasoline generators. Two years later they began producing garden faucets, and after World War II the company grew into a major producer of indoor faucets.
By 1983 the company was owned by N.I. Industries (formerly Norris Industries) of Long Beach, which sold Price Pfister that year to Gold, Irmas and Rousso for $35 million.
