Insilco Agrees to Merge With INR Holdings : $1.1-Billion Deal Tops Earlier Buyout Offer

Insilco Corp., the maker of Rolodex filing systems and Red Devil paints, Thursday said that it has agreed to merge with INR Holdings Inc. for about $1.1 billion, dropping an earlier agreement to be bought out by a group including senior management.

Insilco, a Meriden, Conn.-based diversified manufacturer, said its board agreed to be bought by INR Holdings, which is owned by Texas investors Cyril Wagner and Jack Brown, for $31.75 a common share and associated purchase rights.

Insilco said the transaction, including the refinancing and assumption of debt, was worth about $1.1 billion.

Wagner & Brown, a Texas-based partnership whose principals are Cyril Wagner and Jack Brown, said separately that the transaction was worth $963 million, which does not include the assumption of debt.

Higher Bid Unlikely

Insilco also said its board has withdrawn approval of an earlier agreement to be bought for $29 a share by ISC Acquisition Corp., which was formed by Insilco senior management and First Boston Inc. ISC Acquisition said Thursday that it has withdrawn its pending tender offer for Insilco.

Analysts said Insilco is unlikely to receive a higher bid than $1.1 billion and said the buyers will have to sell some of the company’s assets to finance the acquisition.

“I don’t think you’ll see it surpass $31.75 a share. It’s too close to the real value of the company to think anyone else could come in to realize more value,” said Joel Krasner, an analyst with L. F. Rothschild & Co.

“It is a good price,” said Arthur Stupay, a Prescott, Ball & Turben special situations analyst, who also said some of Insilco’s assets would be sold.

“I wouldn’t expect that the new owners would need to sell anything that quickly,” said Krasner. “But in six to 12 months, there are businesses that are going to be sold.”

He said Insilco could partially spin off part of its units that have a good consumer franchise, such as Rolodex.

Wagner & Brown said it does not plan to divest any of Insilco’s operating units. The partnership said it intend to keep Insilco’s principal offices and facilities at the present locations and planned no changes in operations.

Insilco officials refused to comment on whether management would remain with Insilco after the acquisition.

Tender Offer in Days

Wagner & Brown’s acquisition of Insilco would be the partnership’s first successful takeover of a diversified manufacturing company. During the past two years, the partnership has made unsuccessful runs at GenCorp and USG Corp.

Insilco said INR Holdings will start a tender offer within five business days. The tender will be subject to receipt of at least two-thirds of Insilco’s common shares on a fully diluted basis and on the availability of funds to make the purchases.

Insilco said it has about 25.6 million shares outstanding on a fully diluted basis. It said INR Holdings has obtained $980 million in financing commitments from Wagner & Brown and Merrill Lynch & Co.

Insilco stock closed up $1.125 at $31.125 on the New York Stock Exchange.