Rivals for J.P. Stevens Seek Buyout Accord

Rival bidders for J.P. Stevens & Co. sat down at the bargaining table Tuesday to try and hammer out an agreement in the $1.22-billion battle for the textile giant.

Analysts speculated that fabric maker West Point-Pepperell and the New York investment firm Odyssey Partners are probably nearing an accord that divides Stevens’ assets.

In a joint statement, Pepperell and Odyssey said only that they are “discussing among themselves a proposal that could lead toward the acquisition of Stevens for $68.50 a share in cash.”

Odyssey’s outstanding $68.50-a-share tender offer was endorsed last week by Stevens’ board of directors. The board rejected Pepperell’s competing $67-a-share tender offer, which represented the third round of bidding in the heated takeover contest.

‘A Lion’s Share’

In trading on the New York Stock Exchange, Stevens fell 37 1/2 cents to close at $67.75 a share.

Analysts agreed that Pepperell’s interest in Stevens centers exclusively on the company’s sheet and towel operations, which include manufacturing facilities as well as designer brand names.

Those operations “are the lion’s share of Stevens,” said Deborah Bronston, a textile analyst at Prudential-Bache Securities. Those operations account for 60% of Stevens’ annual sales, which amounted to $1.61 billion last year.

Pepperell, which is making its bid in conjunction with NTC Group, parent of textile manufacturer Bibb Co., already has solved some potential antitrust problems that could arise from the acquisition of Stevens’ bath and bed lines.

Pepperell, based in West Point, Ga., has received Federal Trade Commission permission to sell half of Stevens’ bath lines and 20% of its sheet lines to NTC for about $170 million.

FTC Stipulation

The FTC stipulated, however, that it might later require Pepperell to sell off a sheeting mill, a yarn plant and certain designers licenses.

Among the top brand names in Stevens’ towel and sheet arsenal are Ralph Lauren, Laura Ashley, Gloria Vanderbilt, Perry Ellis, Pierre Cardin and Givenchy, among others. Pepperell’s brands include Arrow, Martex, Lady Pepperell and Burberry.

Other key Stevens operations include a division that sells about $235 million a year in unfinished fabrics and yarn, and an aviation operation that maintains and leases corporate planes, which reported revenue of $61.6 million last year.

Pepperell is likely to be willing to bypass the unfinished fabrics operation. The company’s “thrust has been away from the commodity business like unfinished fabrics and into brand names,” Bronston said.

Odyssey has been rumored to be interested in that division, but analysts are skeptical about whether Odyssey will make a long-term commitment to any of Stevens’ operations.

‘A Quick Buck’

“Odyssey is not in this to get an ongoing, operational business,” said Josephine Esquivel, a textile analyst at Shearson Lehman Hutton. “They’re in it to make a quick buck.”

While analysts believe the final chapter is being written in the takeover battle, some say there may be a third party involved, which is delaying a final agreement.

Springs Industries, a fabric maker based in Fort Mill, S.C., is rumored to be interested in Stevens’ two state-of-the-art towel plants, which are in Wagram, N.C.

Springs spokesman Robert Slough said the company does not comment on rumors, but he added that Springs is “following the Stevens developments with some interest because we’re also in the home furnishings business.” Springs posted 1987 sales of $1.7 billion.

Bidding for Stevens began after it received a leveraged buyout offer earlier this year from a group led by its own senior management, including chairman Whitney Stevens, a fifth-generation member of the family that founded the company in 1813.

Sweetened to $64

Pepperell launched a $62.50-a-share tender offer last month after Stevens agreed to a buyout by Odyssey at $61.50 a share. Odyssey subsequently sweetened its offer to $64.

Pepperell increased its tender offer to $67 a share, but Odyssey topped that by $1.50 a share just hours before its own tender was about to expire.

As of Monday, 576,560 Stevens shares had been tendered under Odyssey’s bid, while 3,050 shares had been tendered to Pepperell. Stevens has about 17.8 million shares outstanding.

Both bidders said they would extend the expiration of their offers to midnight Tuesday. The offers were set to expire at midnight Friday.