Mohasco to Be Taken Over by MHS Holding

Mohasco Corp., a carpet and furniture maker, agreed on Monday to be taken over by MHS Holding Corp., an investment group, for about $489 million in cash and debt securities.

Fairfax, Va.-based Mohasco had been up for sale since February, when Nortek Inc. announced it owned 7% of the company’s 13.39 million shares and was considering an all-cash takeover offer.

Analysts said Monday’s offer of $36.50 a share from the newly formed MHS Holding Corp., which includes Citicorp and Mutual Series Fund Inc., was unlikely to prompt any competing offers.

Kenneth Smith, an analyst at Johnson Lane, said, “I think investors may see it is friendly and that this is going to be the deal.”

Another analyst, David Soshnik of Stifel Nicolaus, said, “I think the likelihood is that this deal will be the deal, but it’s not impossible there’s another bid.”

Edward Johnson, analyst at Johnson Redbook, said the current stock price could indicate that “arbitragers are probably not looking for a higher all-cash bid.”

The furniture and carpet-maker’s stock closed up $1.50 to $35.675 on the New York Stock Exchange.

In a statement, the investment group said it offered $36.50 a share for about 83.2% of Mohasco’s stock, with remaining stock to be swapped for debentures valued at $36.50 each.

After Nortek said in February that it was prepared to make an offer for Mohasco, the company said it would consider a leveraged buyout, a recapitalization involving the sale of one or more of its units or a complete sale.

Bids for Mohasco were due by last Friday.

Various industrial companies and leveraged buyout groups signed confidentiality pacts with Mohasco while considering whether to bid for the company. In March, Nortek received regulatory clearance to buy more than 50% of Mohasco’s common stock.