Wynn’s Chief Doubts Takeover by Buyer of 6.1% Stake in Firm

The chairman of a Michigan automotive company recently acquired a 6.1% stake in Fullerton-based Wynn’s International, but Wynn’s President James Carroll said Tuesday that he is not concerned about the possibility of a takeover.

Carroll said that Heinz Prechter, chairman of ASC Inc. in Southgate, Mich., telephoned him Friday before filing the Securities and Exchange Commission documents that disclosed his Dec. 29 purchase of 50,000 shares of Wynn’s stock for $20.75.

“He explained his company and its background, and he mentioned that he had made an investment. We never discussed takeovers, and it’s my impression that that’s not in the cards,” Carroll said.

Neither Prechter nor other ASC officials could be reached for comment Tuesday.

Wynn’s makes automotive parts and engine additives and had sales of $226 million for the first 9 months of 1988. Privately held ASC specializes in manufacturing and installing convertible tops for several U.S. and foreign auto manufacturers. Crain’s Detroit Business, a Michigan business magazine, estimated ASC’s annual sales at about $200 million.

In the meantime, Wynn’s International has quietly been gaining a following by some of the country’s top professional investors.

Two weeks ago, Gamco Investors Inc., a New York money management firm with $2.7 billion under management, increased its stake in Wynn’s to 13.7%. Gamco made the investment because “we feel in the next 5 to 10 years Wynn’s could become a major participant in the auto after-market,” said Mario J. Gabelli, head of Gamco.

Gamco, which specializes in auto industry investments, ranked fifth among U.S. money managers in 1988 and first over a 5-year period, according to a recent survey of 420 independent money management firms by CDA Investment Technologies in New York. Gamco, which manages investments for several Fortune 500 companies, saw its investments grow 38% in 1988, according to CDA.

Shufro, Rose & Ehrman, another New York money mangement firm, holds 19% of the company’s outstanding shares, the largest single block. The estate of Carl E. Wynn, the company’s founder, holds the second largest block, 18.4%.

Investors and analysts agree that a management shake-up of the company in January, 1988, in which Carroll took charge of the company, signaled a change in fortunes for Wynn’s. The company had grown rapidly in the 1960s and 1970s, largely on the strength of its engine additive products. But its growth has stagnated for much of the 1980s, analysts said.

“This is a big transition year for the company,” William D. Tichy, a securities analyst with Dean Witter Reynolds in San Francisco, said. “This is a very financially strong company that has some valuable franchises in the automotive and petrochemical additive business,” he said.

For the first 9 months of 1988, the company reported profits of $2.2 million on sales of $226 million, compared to profits of $3.1 million on sales of $230 million for the same period of 1987.

The company was hurt in 1988 by a poor performance in its automotive air-conditioning division, which makes up the bulk of Wynn’s sales. The unit lost several large contracts to competing divisions of Mazda and Hyundai and was forced to lay off about 260 workers.

But other divisions fared well, Tichy said. For the first 9 months of the year, for example, Wynn’s engine additives division showed increased profits of 19% and improved sales of 53% over the same period the previous year.

In 1987, Carroll was one of two company insiders who each unsuccessfully attempted to take the company private in competing takeover bids. Carroll joined forces in 1987 with Security Pacific Corp.’s venture capital unit in a $27.25 bid. At the time, Carroll was head of Wynn’s Precision Rubber division in Lebanon, Tenn.

John F. Lillicrop, whom Carroll replaced as president last January, also attempted to arrange financing for a leveraged buyout. But both bids fell victim to the October, 1987, stock market crash.

Over the past 12 months, Wynn’s shares have ranged from a low of $15.75 to a high of $23.25. The stock closed on Tuesday at $23, up 12.5 cents.