A group of top managers at HCC Industries, with the help of some key investors, announced last week a bid to acquire the company for about $10.5 million.
According to a proxy statement dated July 25, a group led by HCC Chief Executive Andrew Goldfarb already owns about 35% of the outstanding common stock in the Encino company, which makes hermetically sealed electronic connection devices.
The group said it would pay $8.50 a share for the 65% of the company that it doesn't own.
HCC's stock closed Friday at $7.50, up $1.25 from before the announcement.
Goldfarb said the group, which was forming a new corporation to buy HCC, had no plans to make major changes at the company. He said the group had not yet signed a definitive agreement to finance the deal.
Edward Pelta, who with his brother Murray controls 16% of the stock, said he had no immediate response to the offer, which was received by HCC's board. Pelta, the son of former HCC Vice Chairman Michael Pelta, who died in July, previously announced that he would nominate himself to HCC's board.
The takeover offer comes at a time when HCC's financial performance is improving. The company reported that its earnings rose 170% for the quarter that ended July 1 to $453,000 on sales of $7.1 million, compared to a profit of $168,000 on sales of $6.8 million a year earlier.
For the fiscal year that ended April 1, HCC posted net income of $993,000 on sales of $26.6 million.
The turnaround followed two years of losses totaling $9.3 million that HCC attributed in part to the slump in the semiconductor industry. Its Hermetite division was heavily dependent on sales to semiconductor companies. HCC began restructuring Hermetite and selling off some of its product lines last year.
HCC has also been hurt by legal problems. In July, 1988, the Defense Criminal Investigative Service, an agency of the Department of Defense, said it would investigate alleged violations of quality control and testing regulations at HCC's Sealtron subsidiary. The case could result in damages or criminal sanctions against HCC.
The company could also be liable for damages of up to $2.4 million in cases stemming from HCC's purchase of a machine-tool subsidiary that allegedly sold defective products before HCC acquired it.
Goldfarb declined to elaborate on his group's reasons for the bid.
But Pelta said of HCC: "I think the long-term prospects--and I'm sure that's what the group thinks--look good."