Tennenbaum Seeks Takeover of Whittaker
Michael E. Tennenbaum, an investment banker formerly with Bear, Stearns & Co. for 32 years, has made a $208-million unsolicited bid to acquire Whittaker Corp., a Simi Valley aerospace parts company with 600 employees.
Tennenbaum, along with two other principals at Tennenbaum & Co., his private investment firm in Los Angeles, owns nearly 5% of Whittaker stock. In a letter to management this week, Tennenbaum said he wants to buy the rest for $18.50 a share through a financing package and take the company private. That package is expected to include a combination of high-yield bond debt and bank debt, he said.
“We’re highly hopeful,” said Tennenbaum, 63, who left Bear Stearns to start his own firm two years ago. “We believe that the financing will be forthcoming and will depend in part on if current shareholders want to continue to hold an equity stake.”
Tennenbaum called Whittaker “a building block,” hinting that it could be the beginning of an aerospace parts conglomerate. He and another principal are engineers familiar with Whittaker’s business of fluid control and fire safety systems, he said Friday. Whittaker’s management is expected to be included in the new ownership if the deal goes through.
Still, Joseph F. Alibrandi, Whittaker’s longtime chairman and chief executive, said Friday there were still many unknowns in the offer.
“This is a long way from what I would consider a firm offer,” Alibrandi said. “But it may be that it has more firm financing than it appears from the offer.”
Alibrandi discussed the proposal with Whittaker’s seven-member board of directors during a Friday afternoon conference call, then said he would not meet with Tennenbaum on Monday as he had tentatively scheduled, but would respond to him next week.
“We think the company is worth more than that, and are moving on a course that will get us more than that. We are exploring all options,” Alibrandi said after the call.
Formed in 1942, Whittaker reported losses in fiscal 1996 and 1997, but in the fiscal year ended Oct. 31 it posted income from continuing operations, before tax benefits, of $22.5 million, versus a loss of $32 million from continuing operations before tax benefits last year.
The company had $131 million in sales in fiscal 1998.
While Alibrandi said he could not disclose how long his board has to respond to the offer, Tennenbaum said it was “less than two weeks,” though he is flexible, considering this is the holiday season.
“We have been shareholders for almost two years and are very serious,” Tennenbaum said. “We look forward to their response.”
On Friday, Whittaker’s stock was up $3.44 a share to close at $16.50 in New York Stock Exchange trading.
It’s unclear yet what other major shareholders, such as Josh Friedman, a managing partner with Beverly Hills-based Canyon Partners, thinks of the deal. The firm owns an 18% stake in Whittaker, or about 2 million shares.
Tennenbaum has a long record of financing major deals. He was a principal advisor and financier to MGM Grand, Tosco Corp. and Jenny Craig Inc., as well as the state of California on the privatization of Blue Cross of California. He also served as chairman of a financial advisory committee set up by Los Angeles Mayor Richard Riordan to review the city’s financial situation.
Tennenbaum also moves in Los Angeles society circles. This summer, his firm reportedly donated between $250,000 and $2 million to the new Walt Disney Concert Hall, according to Disney officials.
