KaiserTech Begins Looking at Buyout Bids : Firm Says It Has Not Definitely Decided to Sell
KaiserTech said Thursday that it has formed a special committee of directors to evaluate “one or more” offers to buy the firm. The bids are expected to be submitted soon by the aluminum company’s management and its largest shareholder.
Cautioning that the board “has not yet decided to sell the company,” KaiserTech revealed that it has adopted a limited shareholder rights plan that would allow shareholders to buy new stock in the company for $1 per share to help ward off a hostile takeover. KaiserTech is the parent company of Oakland-based Kaiser Aluminum & Chemical.
Separately, Maxxam Group, which owns 31% of KaiserTech’s stock, said it plans to submit a proposal to buy the rest of KaiserTech, although it has not made a final decision. Paul N. Schwartz, vice president of the Los Angeles-based real estate and forest products company, said he could not discuss price or how the offer would be financed.
Maxxam Group is controlled by Charles E. Hurwitz, a low-profile Houston financier who is known for his takeover expertise.
Analysts estimated that KaiserTech is worth between $17 and $22 per share, giving an acquisition an indicated value of $765 million to $990 million if a buyer were to purchase all of KaiserTech’s approximately 45 million shares outstanding.
KaiserTech’s stock closed at $18 per share on the New York Stock Exchange, up $2.875. The company’s book value at the end of 1987 was $14.92 per share.
If KaiserTech agrees to sell, it will be the company’s second run through the takeover game. Last year, the company fought off an unsuccessful takeover attempt by Oklahoma investor Joseph A. Frates and British investor Alan Clore.
‘Ongoing Sage’
The battle ended when Kaiser Aluminum, as the parent company was then known, reorganized as part of an agreement with Clore, who had bought out his partner Frates. In exchange for a $140-million investment, Clore was given the right to name a majority of the board of the company’s new parent, KaiserTech.
But Clore was forced to sell his stake in KaiserTech after the October stock market crash caused him to default on loans secured by the stock. Maxxam bought that stock and other KaiserTech shares in March but agreed at that time not to buy more.
“This has been an ongoing saga,” said Sean St. Clair, an analyst with Duff & Phelps in Chicago. “They could stand to put a revolving door in that management suite. You never know who’s going to come through it next.”
KaiserTech is expected to turn a profit from operations this year for the first time in several years and has been reducing its debt. Analyst Thomas Van Leeuwen of Shearson Lehman Hutton in New York predicted that the company’s debt will be reduced to $600 million, thanks in part to proceeds from the sale of its chemicals operations, bringing its debt to about 30% of total capital, “which is very respectable.”
Van Leeuwen said KaiserTech would have the financial strength to fight off a hostile takeover but added that his “guess is that the company will be taken out at this point. It’s nice for the shareholders that there apparently will be more than one bidder.”
“I’m not recommending buying” KaiserTech stock, said Nicholas C. Toufexis, an analyst with Prudential Bache. “I say hold on, and I’ve got my trigger finger ready to sell it.”
KaiserTech’s new rights would become exercisable if a person acquires 20% or more of the stock or if someone who already owns 20% acquires more stock.
