Emhart Corp. said Monday that it had agreed to be acquired by Black & Decker Corp. in a $2.8-billion takeover to thwart a hostile $2.4-billion buyout attempt by an investor group that includes oil heir Gordon P. Getty.
The $40-a-share agreement, unanimously approved by the boards of both companies, came weeks after Farmington, Mass.-based Emhart spurned the unsolicited $35-a-share offer from the Getty group, known as Topper LP.
Peter L. Scott, Emhart’s, president, chairman and chief executive, said the combination with Black & Decker, a leading tool and appliance maker, would create business synergies that should benefit Emhart shareholders.
“The agreement with Black & Decker also alleviates my concern that prolonging the takeover battle with Topper could have adverse effects on certain segments of Emhart’s business,” he said.
Topper issued a statement saying it was “stunned and outraged” over the agreement and that it was not asked to make a higher offer. The group indicated that its offer remained negotiable and said it was studying “numerous options.”
Emhart staged an unsuccessful hostile bid to acquire Stanadyne Inc., a maker of plumbing fixtures, automotive and metal products, in early 1988. Stanadyne escaped by undergoing an $820-million leveraged buyout led by the investment firm Forstmann Little & Co.
Scott has overseen a restructuring at Emhart that has resulted in the sale of some 18 businesses and the purchase of several key product lines since September, 1986, such as Price Pfister plumbing fixtures and GardenAmerica in-ground watering systems.
Emhart and Black & Decker indicated that they planned to sell Emhart’s electronics and information systems division under an overall debt-reduction program.
Black & Decker acquired the small appliance business of General Electric Co. several years ago. The company also waged a lengthy unsuccessful battle last year to acquire American Standard Inc., a New York-based plumbing and air-conditioning equipment maker, and has been seeking other acquisitions since.
Nolan Archibald, Black & Decker’s president and chief executive, said Emhart would broaden his company’s product base and provide “excellent growth opportunities for Black & Decker for years to come.”
“The do-it-yourself products of Emhart’s consumer sector fit ideally with our power-tool business, broadening our lines with non-competing products moving through identical channels of distribution,” he said.
The companies said they were considering cutbacks in Emhart’s 30,000-member work force but had made no decisions. They also said Black & Decker had agreed to honor all Emhart employee severance plans.
Black & Decker, with annual sales of about $2.3 billion, is the world’s leading producer of power tools and household products. The company posted a profit of $33 million on revenue of $705.5 million for its first quarter ended Dec. 25.
Emhart is a diversified producer of industrial and commercial products and information and electronic systems. Emhart had 1988 revenue of $2.76 billion and net income of $126.6 million.
Mitchell Quain, an analyst with Wertheim Schroder in New York City, said Black & Decker could suffer from the debt it must incur to finance the buyout, if high interest rates slow housing development and thus suppress demand for its products.
But Quain also said that naming Scott as a director and chairman of Black & Decker would give the company a better shareholder focus.