Founder Unlikely to Sell, Official Says : Australian Firm Buys Into Jorgensen
Earle M. Jorgensen Co., the Lynwood steel and aluminum distributor whose 90-year-old chairman and namesake is better known for his role in Ronald Reagan’s kitchen cabinet, has attracted the interest of an Australian investor.
The investor, Australian National Industries, has acquired a stake of at least 5% in the company.
William J. Shaw, Jorgensen’s vice president and treasurer, said the company learned of Australian National’s investment in a phone call Thursday from Australian National’s investment banker.
The investment banker told Jorgensen that Australian National, Australia’s leading engineering group, would soon make a filing disclosing its investment with the Securities and Exchange Commission.
“We don’t know what their intentions are,” Shaw said. “We’ll just have to take a look at the filing, and then we’ll see.”
Jorgensen’s stock, which moved up all of last week, jumped on the news. In composite New York Stock Exchange trading, Jorgensen closed Friday at $32.875, up $3.125, on turnover of 25,600 shares, or more than eight times the average volume. Jorgensen started the week at $27.50.
Analyst John Tumazos of Donaldson Lufkin & Jenrette in New York said a hostile takeover attempt is unlikely. Earle Jorgensen owns 31.9% of the company’s stock, and additional holdings by other members of management, directors, the company pension plan and an employee savings plan brings insider control to 50%.
No Interest in Sale
“There ain’t no way there’s going to be an unfriendly deal in this company, and I don’t think Jorgensen is interested in selling,” Tumazos said. He noted that a 5% investment in the company would be worth around $10 million--”not a big deal,” he said.
Earle Jorgensen himself couldn’t be reached for comment, but Shaw, the company’s treasurer, said the company founder appeared to have no interest in selling the company. “The company is basically his life, his career,” Shaw said. Earle Jorgensen’s 63-year-old son, John W. Jorgensen, is president and chief executive.
Shaw said officials of Australian National paid a visit to Jorgensen several months ago. “They have some operations that are similar to ours,” he said, adding that it was a “very, very friendly visit.”
Officials of Australian National couldn’t be reached for comment. Through the first half of the year, Australian National posted a profit in Australian dollars of $74.8 million, compared to $67.1 million a year earlier. Revenue, also in Australian dollars, fell to $1.43 billion from $1.46 billion. The Australian dollar is worth about 78 U.S. cents.
For the first half of this year, Jorgensen posted net income of $5.5 million, compared to $3.3 million a year earlier. Revenue climbed to $233.5 million from $160.4 million.
Jorgensen, founded in 1923 to supply oil field tools to Southland oil drillers, distributes and processes steel and aluminum products. The company has 28 plants in 24 U.S. cities.
Though earnings climbed in the first half, Shaw said profits were held down by employment and production problems at a plant in Seattle.
A longtime friend of Reagan, Earle Jorgensen is part of a group who bought the Bel Air home that the President and his wife, Nancy, will occupy when they return to California.
