Teledyne Inc., financier Henry Singleton's conglomerate that has fallen on tough times in the 1990s, put itself up for sale Tuesday in what could lead to the breakup of the once-high-flying company.
"The Teledyne as we know it is definitely unlikely to continue," said Jay Abramson, research director at Cramer Rosenthal McGlynn Inc., a New York money manager that owns 1.5% of Teledyne's stock.
Los Angeles-based Teledyne manufactures an eclectic mix of products, ranging from defense electronics to specialty metals to the Water Pik line of consumer dental-hygiene goods. The company put itself on the block in the face of a hostile proxy fight that WHX Corp., the parent of steelmaker Wheeling-Pittsburgh Corp., is waging for control of Teledyne's board.
Other suitors have expressed interest in Teledyne, the company said, but it declined to identify them.
After the announcement, Teledyne's stock soared $3.875 a share to close at $26.625 in New York Stock Exchange trading. That gave Teledyne a current market value of $1.5 billion.
A sale of Teledyne would probably dismantle a company that the enigmatic Singleton spent three decades assembling before retiring as chairman in 1991. Now 78, Singleton is still Teledyne's biggest stockholder with a 13% stake, and he remains on its board. Forbes magazine estimates his overall fortune at $630 million.
Singleton was a master at buying and selling assets, which for years produced rich returns for him and other Teledyne investors even though the company was a far-flung, free-wheeling enterprise whose divisions enjoyed exceptional autonomy.
All that changed in the 1990s. The recession, defense spending cuts and excessive operating costs battered the company. Despite reorganizations by Singleton's successors, Teledyne's performance and stock price improved little from five years earlier.
In addition, Teledyne was entangled in a rash of criminal and civil defense fraud lawsuits filed against the company, which have cost Teledyne more than $100 million in fines, settlement costs and legal expenses.
Whether Teledyne is ultimately broken up and sold in pieces depends on several factors. It gave no indication of which type of deal it prefers, and a spokeswoman said company executives and Singleton were not commenting.
One of Teledyne's key assets is a $1-billion surplus in its pension fund. Investment sources familiar with the company said a buyer would probably retain more of that pension surplus if Teledyne were bought in one piece. That is because of the way defense contractor pension funds are affected by U.S. tax laws and Pentagon rules.
Even so, it is expected that Teledyne's buyer would then try to sell some of the company's parts to other companies because of Teledyne's unusual mix.
WHX, run by New York investment banker Ronald LaBow, launched its proxy battle last month after Teledyne rejected its takeover bid of $22 a share, or $1.2 billion. WHX said that if it wins control of Teledyne's board, it will seek to sell the company for at least that price.
Teledyne said Tuesday that WHX is welcome to bid again, but it asked that WHX drop its proxy contest "so that Teledyne is not distracted" from its goal of maximizing Teledyne's value for "all of its shareholders."
WHX responded warily, saying it will consider Teledyne's request to drop the proxy fight. But WHX said it is also troubled that Teledyne gave no timetable for selecting a bid and did not postpone its April 26 annual meeting.
The statement signals WHX's worry that if it drops its proxy fight, Teledyne might then back away from its plans to sell the company and force WHX to wait another year before again trying to seize control of Teledyne's board.
Last year, Teledyne posted an $8.4-million loss on sales of $2.4 billion. The company employs 20,000 people and has divisions in Pomona, Los Angeles, Moorpark and San Diego.