Centel Receives $2.8-Billion Bid From Edelman, Partner

Asher B. Edelman and George L. Lindemann on Tuesday conditionally offered to buy the telecommunications company Centel Corp. in a $2.8-billion bid that was greeted skeptically by Wall Street and Centel’s managers.

Centel shares closed $4.875 higher at $50 on the New York Stock Exchange, far below the Edelman group’s bid of $65 a share.

In a statement, Centel said “the proposal by George L. Lindemann and Asher B. Edelman to acquire Centel is not a credible offer.”

The bid was disclosed quickly in response to a plan Friday by Centel to buy a large cellular telephone unit in a highly leveraged transaction that would make it a less desirable takeover target but enhance its long-term growth prospects, analysts said. Among other things, Centel operates the nation’s 11th-largest telephone system and owns electric utilities and cable television outlets.

Edelman and Lindemann said their new takeover bid was conditioned on Centel rescinding the new $763-million agreement to buy United Telecommunications Inc.’s cellular telephone unit.

They said they would lower their offer to $60 a share, or an estimated $2.5 billion, if that purchase goes through.

The two investors own 5.5% of Chicago-based Centel’s stock and have been seeking three seats on Centel’s board at its June 28 annual meeting. They said they would continue the proxy fight and at the same time attempt to negotiate a takeover.

Lindemann is the chairman of a small New York-based cellular telephone company called Metro Mobile CTF Inc. Edelman is a veteran of a number of corporate raids, including an unsuccessful bid last fall for Lucky Stores.

Centel Chairman John Frazee said in a statement that the new offer is “a tactical device designed to try to affect the outcome of the current proxy contest.”

Edelman and Lindemann said they have not yet arranged financing for the bid for Centel, which has 43,214,000 common shares outstanding.

The two investors said they opposed the purchase of the United Telecommunications unit, saying the debt being taken on to acquire the unit would be a “poison pill” for any potential Centel buyer to swallow. They added that they opposed the purchase of the United Telecom unit because it does not promote shareholder value.

“This acquisition is overpriced and substantially reduces shareholder values,” Edelman and Lindemann said.

The company, meanwhile, argued that it is involved in a long-term strategy to emphasize cable television, cellular communications and local exchange telephone service.

“We feel the actions by Lindemann and Edelman today should not distract attention from the basic issue before the share owners regarding Centel’s future and the need to reelect directors who are committed to our strategic plan to maximize share owner values,” Centel said.

The two investors requested in their letter to the directors of Centel that the board respond to the offer by June 10, but analysts said Centel will reject the bid.

Analyst James Stork of Duff & Phelps said he considered $65 a share for Centel a good price but predicted that management would reject the Edelman-Lindemann group offer.

“Some speculate they (Centel management) may attempt an LBO (management leveraged buyout) or that they might look at other poison pills. We haven’t heard the last of this by any means,” Stork said.

Centel’s earnings rose to $33.3 million in 1988’s first quarter on sales of $368.7 million from earnings of $31.8 million on sales of $345.7 million a year earlier.