Tomkins PLC Outbids Electrolux for Murray Ohio Manufacturing Co.

Murray Ohio Manufacturing Co., which stiffly resisted overtures from Sweden’s Electrolux, said Tuesday that it has agreed to be taken over by another foreign firm, Britain’s Tomkins PLC, for about $224 million.

News that Murray had found another suitor in the British-based industrial holding company prompted Electrolux to drop its lower bid of $196 million.

Murray, based in Nashville, is a leading maker of power mowers and bicycles. It had been resisting Electrolux on the grounds that its bid was too low, undervaluing the company’s assets.

Tomkins, an industrial and buildings products group that also makes lawn mowers, said it had entered a merger agreement with Murray and would make a tender offer at $56 a share--$4 higher than the latest Electrolux bid.

After the Tomkins deal was announced, Electrolux formally withdrew from the bidding.

“Because of the agreed deal between Murray and Tomkins at $56 a share, Electrolux is withdrawing its bid,” an Electrolux spokeswoman said in Stockholm. “Electrolux does not find it economically justifiable to pay a higher price.”

The spokeswoman said Electrolux had already raised its bid once from $48 a share. “None of the information we have received from Murray has inclined us to raise the offer above $56 a share,” she said.

J. L. Duncan, president of Murray, said: “We look forward to our association with Tomkins. We believe that this transaction is in the best interests of the company and its shareholders, and that Tomkins’ business philosophy will enable Murray to develop its potential fully.”

If the Murray deal is completed, it will be the second buyout of a U.S. company by Tomkins in a year, as well as being the latest in a string of recent British acquisitions in the United States. In June, 1987, Tomkins bought Smith & Wesson, the arms manufacturer, for $112.5 million.

“The acquisition of Murray represents the next logical step in Tomkins’ efforts to expand its U.S. operations,” said Tomkins Chairman Gregory Hutchings.

Murray, which twice rejected Electrolux’s offers, had invited the Swedish firm to raise its $52-a-share or $196-million bid. But Electrolux said Monday, after reviewing additional information supplied by Murray, that it found no reason to increase its bid.

When it rejected the latest Electrolux offer, Murray said it was in negotiations with several parties about a merger or recapitalization to avoid the Swedish conglomerate.

Electrolux, one of Europe’s largest appliance makers, had been interested in Murray for more than two years as a means of expanding in the American market. Murray is particularly attractive because of its presence in the discount store market.

Electrolux in 1986 acquired White Consolidated Industries, the U.S. maker of Frigidaire, White-Westinghouse and Kelvinator appliances.

Tomkins said it had no Murray shares at present and would fund the offer partly from its own cash resources and partly from a rights issue for shareholders. Tomkins, whose revenue last year was 207 million pounds ($370 million), said the 82-million pound ($146-million) rights issue would only be implemented if the offer for Murray became unconditional.

Tomkins shares were slightly lower on the London Stock Exchange on Tuesday at 2.34 pounds ($4.18), compared to a close of 2.36 pounds ($4.21) Monday.

Murray’s stock price fell in New York on Tuesday, closing down $2.50 to $55.25. The shares lost $2.375 on Monday after Electrolux declined to raise its bid. The shares have recently traded as high as $64.