Firm Declines to Top Rival’s Bid for Pacific
Kollmorgen Corp., a Waltham, Mass., maker of motors and controls, dropped its hostile $23.75-a-share bid Monday for its Newport Beach-based industry peer, Pacific Scientific Co., shortly after Pacific announced it will sell itself to a firm that submitted a 27% higher bid.
Pacific said it accepted a bid of $30.25 a share from Danaher Corp., a Washington, D.C., maker of controls, tools and other industrial products that is 10 times the size of Kollmorgen. Outgunned, Kollmorgen withdrew after pursuing Pacific Scientific for six months, first with friendly overtures, then with a predatory tender offer.
Gideon Argov, Kollmorgen’s chairman and chief executive, said “it wouldn’t have been in the interest of our shareholders” to top Danaher’s bid.
Danaher’s offer, valued at $460 million, includes an assumption of debt as well as the cash payment of $30.25 a share to shareholders.
Pacific Scientific stock rose $4.75 a share Monday to close at $29.88, while Danaher advanced $1.88 a share to $65 and Kollmorgen was up 50 cents a share to $19.25. All three stocks trade on the New York Stock Exchange.
Danaher emerged as the best solution to Pacific Scientific’s frantic attempts to avoid a shotgun marriage with Kollmorgen.
Pacific Scientific mulled, then rejected, other options, such as a stock buyback, capital restructuring, or sale of part of its business, said Lester “Buck” Hill, its chairman and chief executive. It received inquiries from 60 companies interested in buying the firm or a piece of it, exchanged confidential information with more than 40, and narrowed the list of potential mates to three, including Danaher.
In a long meeting at company headquarters Saturday, its directors determined that Danaher’s offer was the best deal for shareholders, Hill said. Pacific Scientific decided to hook up with a company that is several times bigger, sells to many of the same customers, and is well-liked by Pacific management.
If the sale proceeds, Hill expects that all 25 employees at Pacific Scientific’s corporate headquarters--including him--will be out of jobs.
Hill was hired a year ago when the company faced losses and investor lawsuits stemming from the failure of plans to develop its “Solium” technology for dimming fluorescent bulbs. The company sold the Solium unit to a Chicago lighting firm in December.
Hill said he and three key executives--David Schlotterbeck, the president; Winston Hickman, chief financial officer; and Steven Yasbek, the controller--aim to sell themselves as a turnaround team for another local company in trouble.
Hill said it’s likely that Danaher would retain the rest of Pacific’s work force of nearly 2,400 employees, including about 425 in other California operations in Yorba Linda, Santa Barbara, Sunnyvale and Duarte.
In mid-December, Kollmorgen initially bid $20.50 a share for Pacific Scientific, then raised the offer to $23.75 a share on Friday.
Danaher’s offer is subject to approval by shareholders and regulators. Shareholders may approve the deal by tendering at least 90% of the company’s stock. If fewer shares are tendered, the company will call a special meeting, at which the deal could be approved by a simple majority vote.
