Maxwell Raises Its Bid for Macmillan to $2.41 Billion
Just when Macmillan Inc.’s top executives thought they had solved their takeover woes earlier this week by agreeing to a $2.36-billion leveraged buyout, an avid but unwanted British suitor, Maxwell Communications Corp., on Thursday raised its cash bid for the company to $86.80 a share, or $2.41 billion.
MCC is 51% owned by British publishing magnate Robert Maxwell, who said in a statement that the latest offer was made after discussions with his advisers and representatives of Macmillan. As part of the offer, Maxwell will also pay Macmillan’s recently announced quarterly dividend of 20 cents a share on Oct. 14 to stockholders of record Sept. 30.
Maxwell stated that he remains willing to purchase the 11 information services that he told Macmillan Chairman and Chief Executive Edward P. Evans last week he would buy for $1.4 billion.
Macmillan spokesman David R. Jackson said the publishing company had no comment on Maxwell’s latest bid.
On Monday, Macmillan agreed to be acquired by MI Holdings, a newly formed corporation organized by Kohlberg Kravis Roberts & Co., for $85 a share in cash and securities. KKR spokeswomen Ruth Pachman also had no comment about the Maxwell offer.
Analysts noted that Maxwell holds an advantage due to the strength of the British pound compared to the dollar, and they said it may be hard for an American company to match or beat this offer with cash.
“I’m not sure that the company management and KKR are going to be able to match this one,” said Bruce Thorp, media analyst for PNC Financial Group in Philadelphia. “They have to sweeten their own deal, probably with paper rather than cash. It just seems to me that it is going to be hard for an American company to compete effectively with an eager foreign buyer, which is what we have here.”
Trading Temporarily Halted
Analysts’ estimates of Macmillan’s value have ranged from $80 to $110 a share.
“We are getting closer to the $110 share value that we believe the company has,” said Bruce Benteman, research analyst for Wealth Monitors, a newsletter published in Kansas City, Mo. “Maxwell is just saying that it’s worth it, and it’s worth a lot more than that.”
After Maxwell’s announcement, trading in Macmillan stock was halted Thursday at the New York Stock Exchange for 29 minutes. The stock resumed trading at $86.50 and closed at $85.50 a share, up $2.
In July, Maxwell offered to buy Macmillan for $80 a share with the condition that Macmillan’s board agree to the bid and that Macmillan halt a restructuring it had proposed to fend off a takeover bid from the Robert M. Bass Group. Bass’ most recent bid of $75 a share expires Sept. 23.
Maxwell launched his bid Aug. 12, and Macmillan rejected it as inadequate. Maxwell then offered to drop his tender offer if he could purchase the assets of Macmillan’s information services for “not less than $1.1 billion.” At all times in the bidding, Maxwell has said he wants to retain current management.
Other Takeovers Failed
Maxwell has disclosed he held “friendly discussions” with Evans in London on Aug. 30, when he was provided with information about the company. At a Sept. 8 meeting with Evans, Maxwell said he was prepared to raise his offer for the information services to $1.4 billion and his $80-a-share offer for the entire company to $84 a share.
Maxwell’s first foray into the American publishing market was in May, 1987, when he offered $1.73 billion for the Orlando, Fla.-based textbook publisher Harcourt Brace Jovanovich. The bid failed when the company recapitalized itself. Maxwell also tried to take over the information services company Bell & Howell but lost out to the Bass Group.
“These things take a while,” Benteman said. “Just when you think they are done, someone else comes along with another offer.”
