AMI Plans to Encourage Other Buyout Bids
American Medical International, under pressure from key shareholders to respond to a bid to buy the company, said Wednesday that it will seek other offers.
The Beverly Hills hospital management firm decided to encourage others to bid before taking a position on a $24-a-share buyout offer from a group led by Dr. M. Lee Pearce, an AMI director and major shareholder.
Pearce and his two partners in Shamrock Investments Acquisition Corp., a Los Angeles group that is unrelated to Roy E. Disney’s Shamrock Holdings, joined forces March 23 and offered to buy AMI for $1.7 billion, nearly all in cash. On the same date, an investment banking firm submitted a competing proposal--a restructuring plan to increase share prices to $25 to $29 per share, including a special cash dividend. The trading range for AMI stock during the past year had been $14 to $18 per share.
AMI has taken no position on the proposals. Instead, the company immediately created a special committee to evaluate the offers and explore other options. The panel, composed of seven of AMI’s 15 board members, decided that the company should solicit other bids and examine other recapitalization plans, according to a company statement.
“As part of the process,” said the statement, “AMI will enter into discussions with third parties who express an interest in acquiring the company. Non-public information would be provided to qualified parties who execute an acceptable confidentiality agreement.”
Financial Adviser
AMI said it has retained Goldman, Sachs & Co. as its financial adviser and Skadden, Arps, Slate, Meagher & Flom as its legal adviser. The statement was released after the close of trading at the New York Stock Exchange, where AMI shares finished unchanged Wednesday at $21.75.
The announcement comes five days after RTF Partners, a major AMI investor group led by the billionaire Bass brothers of Texas, warned AMI management that it may sue or attempt to take over the company if it failed to take quick action to boost the value of AMI stock. RTF urged AMI to solicit other offers.
The AMI statement said there was “no assurance” that they would choose any of the options. However, some industry analysts said the company would accept one of the options.
“In my opinion, they have to do what’s right for the shareholders,” said Rae Alperstein, an analyst at Bateman Eichler, Hill Richards in Los Angeles. “And that means they will restructure or sell.”
Alperstein said AMI decided to solicit other offers to get the Pearce group to raise its bid and to lure other potential buyers into a bidding war.
However, Kenneth Abramowitz, an analyst at Sanford C. Bernstein & Co., predicted that there would be no new bidders. He said the company is examining the recapitalization option because it may want to fend off Pearce or the RTF group by buying its own stock.
