Harcourt Makes Offer for National Education
Publisher and retailer Harcourt General Inc. launched an unsolicited $740-million bid Wednesday for Irvine-based National Education Corp., upping the ante as it starts a fight to buy the world’s largest correspondence school.
Harcourt’s plan to go to NEC shareholders with a $19.50-a-share tender offer surpasses the all-stock deal NEC directors reached last month with Sylvan Learning Systems Inc. in what was billed then as the “biggest deal in the history of the industry.”
The initial value of Sylvan’s offer, which NEC’s board has accepted, was $675 million, but a drop in Sylvan’s stock price since its March 12 offer has reduced the value to $663 million.
The agreement with Sylvan spurred Harcourt to make its unsolicited bid for the revived education firm, Harcourt executives said. “We hope it’s going to be friendly,” Harcourt spokesman Peter Farwell said about the offer. “We recognize that they are in a merger agreement and couldn’t have discussions with another party. But we’re committed to going forward.”
NEC said it will review Harcourt’s offer and will try to respond before the Boston- area company makes the tender offer effective, which Farwell said would occur within five days. Executives at Sylvan’s Baltimore headquarters weren’t available for comment.
Analysts were split in their views of the competing bids, but agreed that a higher price will probably be coming.
“It’s nice to be loved,” said analyst Michael T. Moe of Montgomery Securities in San Francisco. He talked with numerous NEC shareholders Wednesday and said, “All of them are happy they’ve got another suitor, even if they like Sylvan. At the end of the day, they win either way.”
Wall Street, which battered both Sylvan and NEC a month ago, apparently liked Harcourt’s entrance on the scene. The stocks of all three firms rose, with NEC gaining the most--$4.375--to close at $19.375 a share on the New York Stock Exchange. Harcourt closed at $45 on the NYSE, a $2.125 increase, and Sylvan rose $1 a share to close at $30.125 on Nasdaq.
Two years ago, Harcourt considered buying NEC. But the Irvine firm had lost $150 million over the previous nine years and hadn’t turned the corner yet, so Harcourt passed, Farwell said.
