Bass Raises Bid for Macmillan, Sues to Stop Restructuring
Robert M. Bass Group and Macmillan Inc. locked horns Monday as the struggle for control of the nation’s third-largest textbook publisher took on an increasingly hostile tone.
Over the weekend, the Bass Group raised its bid for the company to $73 a share, or $1.9 billion, and then filed suit Monday to stop Macmillan from implementing a restructuring plan scheduled to take effect later this week. However, Macmillan said it remains committed to the reorganization.
“It’s not surprising that Bass is suing Macmillan,” said Bruce Benteman, a research analyst at Wealth Monitors, an investment newsletter in Kansas City, Mo. “This is very close to being a hostile offer.”
The Bass Group fired the first shot in the current bidding war May 17 when it offered $64 a share for the publishing company’s roughly 26 million shares. Macmillan countered last week by announcing a massive restructuring that would divide the company into two entities--Macmillan Publishing Co. and Macmillan Information Co.
Under Macmillan’s plan, shareholders would receive stock in both firms as well as special cash dividends totaling $52.35 a share, scheduled to be paid June 10 and June 11. Analysts have valued Macmillan’s plan at $65 to $75 a share.
In addition to the sweetened all-cash offer, the Bass Group also came back with an alternative restructuring plan that is similar to Macmillan’s but offers a larger cash dividend of $58 a share, or $1.5 billion, to current stockholders. In a letter delivered to Macmillan’s investment bankers Saturday night, Bass stated that it was prepared to purchase shares in the newly created companies and to meet the terms of Macmillan’s restructuring offer for management and employees.
Macmillan’s proposal would give restricted stock in Macmillan Information to certain key executives in exchange for cancellation of restricted stock and stock options in Macmillan Inc. These executives would hold 39% of the new information company, and management and an employee stock ownership plan would own 36% of the publishing concern.
Bass asked Macmillan to respond to its new offer by noon Monday and to halt the restructuring plan. However, Macmillan responded that its board would consider the Bass offer later this week.
Since Macmillan plans to go ahead with its restructuring, Bass filed suit against the company in Delaware Chancery Court, requesting that Macmillan be restrained from issuing the special cash dividends on Friday and Saturday. A court spokesman said the case was being handled on an “expedited basis” but could not confirm reports that a tentative hearing date had been set for Thursday.
Analysts expected the court to grant the restraining order and halt the restructuring program.
“Then Macmillan will have to react,” said Bert L. Boksen, chief investment officer for Raymond James & Associates in St. Petersburg, Fla. “Macmillan might have to sweeten (its restructuring plan) a bit, either match or slightly exceed the Bass offer.”
In another development, Macmillan announced that “an entity related to the Bass Group” requested government approval under the Hart-Scott-Rodino Act to acquire more than 50% of Macmillan’s outstanding shares. The Bass Group currently holds 9.1% of the shares.
Meanwhile, Macmillan said it is suing Bass in U.S. District Court in New York for alleged securities violations in connection with its stock accumulation, according to David Jackson, a spokesman for Macmillan.
Bass acquired the publishing and information services company of Bell & Howell Co. in a leveraged buyout last winter.
“If he were to acquire Macmillan, it would make Bob Bass one of the largest players in the information business in the world,” Benteman said.
When Bass made his first offer May 17, Macmillan’s stock was trading at roughly $51 a share. In New York Stock Exchange composite trading, Macmillan shares closed Monday at $75, up $3.50, on heavy volume of 1.37 million shares.
