Rockwell Says Way Is Clear for Reliance Merger : Acquisition: Defense giant has bid $1.5 billion for the industrial automation company, which had accepted a lower competing offer.
Rockwell International Corp. said Monday that there are no longer any antitrust questions about its proposed buyout of Reliance Electric Co. and pushed the company to sign a merger agreement.
Reliance, which has already agreed to a deal with General Signal Corp., issued a statement saying it is studying Rockwell’s higher offer but has concerns about it.
General Signal is offering about $26 worth of its own stock for each Reliance share, a bid valued at about $1.4 billion. Rockwell is offering $30 a share in cash, or $1.5 billion.
“We are totally committed to acquiring Reliance. We hope you will cooperate with us promptly,” Donald R. Beall, Rockwell’s chairman and chief executive officer, wrote in a letter to top Reliance officials.
Rockwell wants to build its presence in the industrial automation business with the Reliance acquisition.
Rockwell said there are no longer U.S. antitrust regulatory approvals needed for its proposed deal to go through. The Justice Department has not made a second request for information under the Hart-Scott Rodino Act, which Rockwell says lifts any uncertainties.
Rockwell said Cleveland-based Reliance should redeem its “poison pill” hostile takeover defense and pay General Signal the $50-million fee for calling off their merger.
Late in the day, Reliance’s president and chief executive officer said the company will complete its review of the Rockwell merger offer soon. But John C. Morley said in a statement that an initial review found that “the draft merger agreement contains many uncertainties regarding Rockwell’s obligation to close the transaction.”
He said “these uncertainties do not justify the risk” of talking with Rockwell, a dialogue that could lead to an end to Reliance’s deal with General Signal and the $50-million termination fee.
Rockwell wants to acquire Reliance to help build up its electronics and industrial-equipment business. It says it would merge Reliance Electric with its Allen-Bradley division, a move that analysts say would position Rockwell to make smarter industrial automation products.
“The combination of Allen-Bradley and Reliance has powerful strategic significance in creating an organization that will compete effectively with formidable European and Japanese competitors in addressing the global automation markets,” Beall said in his letter to Reliance officers.
In Monday’s trading on the New York Stock Exchange, Reliance Electric’s stock rose 75 cents to close at $30.75. General Signal closed at $35.63, up 63 cents, while Rockwell ended the day at $35.38, down 25 cents.
