Steel Partners Makes Offer for GenCorp Shares

Investment fund Steel Partners II offered Thursday to buy the remaining stock it doesn’t already own in aerospace and chemical firm GenCorp Inc. for about $770 million. The news drove GenCorp’s stock to a 52-week high.

Steel Partners, GenCorp’s second-largest institutional owner, has been critical of management at Rancho Cordova, Calif.-based GenCorp.

Steel Partners offered $17 a share in cash for GenCorp, a 20% premium over Wednesday’s closing price of $14.15, for the 90% of shares that it doesn’t own.

GenCorp issued a statement saying it had received the Steel Partners offer and was meeting with advisors to consider its response.

In a letter to GenCorp, Steel Partners rebuked the company’s management and its board for making mistakes in allocating its capital and doing a poor job in managing day-to-day business operations. Steel Partners also complained about “the recent sale of the GDX Automotive businesses at a loss of over $300 million.”

Steel Partners called GenCorp’s plan to privately offer up to $75 million of convertible debt and 8.6 million shares of common stock as unnecessary and dilutive.

“Unfortunately, we can no longer stand by while the value of the company and our investment is diluted by another poor and significant decision,” Steel Partners said in its letter.

Steel Partners, headed by Warren Lichtenstein, made its initial investment in GenCorp in 2000. The investment fund owns 4.4 million shares of GenCorp, or a 9.7% stake.

Steel Partners said in the past it had talked with GenCorp about “ways to ‘unlock’ the value of the company’s 12,700 acres of real estate in Sacramento.”

GenCorp shares hit a 52-week high of $17.70 on Thursday before closing at $17.50, up $3.35, or 23.7%, for the day. It was the largest percentage gainer on the New York Stock Exchange.