Banner to Buy Fairchild for $265 Million
Banner Industries Inc. will buy rival aerospace concern Fairchild Industries Inc. for $265 million cash, the companies announced Monday.
The $18-a-share deal from Cleveland-based Banner outbid a $17-a-share offer from the Carlyle Group, a Washington-based merchant bank that has been pursuing Fairchild since last year and has a 15% chunk of the company’s stock. There was no immediate comment from Carlyle on the Fairchild-Banner agreement.
“This transaction gives Banner a unique opportunity to acquire a major aerospace company which complements our existing aviation businesses, but more importantly will enable the companies to benefit greatly from synergy opportunities,” Banner Chairman Jeffrey Steiner said in a prepared statement.
The agreement was negotiated by a special committee of Fairchild’s board appointed to consider the unsolicited Carlyle offer and any others.
The Banner offer was accepted by Fairchild at a special board meeting Sunday. The committee, however, has until Friday to solicit other offers.
Under terms of the deal, Banner was given an option to acquire Fairchild’s aerospace fasteners division for $150 million in the event Fairchild’s board accepts a better offer.
Fairchild’s largest fastener operation, Culver City-based Voi-Shan, is the subject of a criminal investigation by a federal task force looking into allegations that the firm falsified testing of nuts, bolts and rivets sold to the government.
Banner also received an option to acquire 2.2 million authorized, but unissued, shares of Fairchild stock for $18 per share in the event the Fairchild board determines to accept a higher offer.
Mortimer M. Caplin, chairman of the Fairchild special board committee, said, “in the absence of a superior offer, the board wholeheartedly endorses the agreement and will recommend the acceptance of the tender offer by Fairchild’s stockholders.”
Banner, with 1988 annual sales of $840 million, distributes and manufactures aerospace parts, including aircraft tires, avionics and fasteners.
Fairchild, with a large fasteners division, also is involved in space systems, defense electronics, industrial products and communications services.
