Mergers & acquisitions news

Mergers & acquisitions news

Dell adopt poison pill ban to prevent hostile takeover bids

Personal computer manufacturer Dell Computer Corporation has adopted a “poison pill’ defense to ward off possible hostile takeovers although there are none at this time on the horizon. Michael Dell, founder and chief executive of the Austin, Tx.-based company controls about 29 percent of e company’s stock. The company’s board voted that shareholders of record on Dec. 13 will be given purchase rights to buy a new class of junior preferred stock. However, those rights can only be exercised should a buyer acquire 15 percent or more of Dell’s common stock or announced a tender offer to purchase that much.

Regulators delay Utilities merger

The Federal Energy Regulatory Commission may be taking a closer look at proposed mergers as a whole today since so many utilities are becoming involved in transactions. As a prime example, plans for Washington Water Power Company of Spokane, Wash. and Sierra Pacific Resources of Reno to finalize their merger agreement by the end of the month may be stalled since the F.E.R.C has two complaints: The companies have not shown that the deal would generate $450 million in estimated cost savings. Also, they have proven that the merger will be in the “best interest of customers.” It is likely that the hearings will result in hindering approval from the F.E.R.C. and the Securities and Exchange Commission.

Sara Lee and JP are considering a remarriage to increase competitiveness

In an effort to boost its share of national accounts, Sara Lee Corp. is considering recombining its $2 billion food-service business with that of an affiliate, JP Foodservice Inc. Today JP, with fiscal 1995 sales of $1.1 billion and net income of $1.9 million, is the’ country’s seventh-largest food-service distributor. The proposal would reverse an earlier deal if successfully completed. In 1989, the Chicago-based apparel and food giant shed a large portion of its PYA/Monarch food-service business in a leveraged buyout which became JP Foodservice.

In the words of Prudential Securities analyst, John M. McMillin, “They’re putting Humpty Dumpty back together again — they hope to build a more formidable competitor to Sysco.” Sysco is the nation’s number one food service company. Company executives maintain that a merger would result in valuable operating, purchasing and customer-service synergies. Today Sara Lee owns almost 39% of JP’s shares, and the deal under consideration would increase its share to more than 80 percent.

According to terms of such a proposal, JP would issue 52.4 million new shares of its common stock to Sara Lee. At recent closing prices, the deal would be valued at about $812.2 million, not counting Sara Lee’s PYA/Monarch debt of $125 million. If it is successfully closed, the deal would add an estimated $1 billion in sales to Sara Lee, which in fiscal 1995 reported sales of $173 billion.

Possible bid for Giant Food following chairman’s death

Analysts predict that London-based supermarket company J. Sainsbury PI with a strong interest in increasing its 50% sake in Giant Inc.’s voting stock, may accelerate its bid for full ownership of the Washington-based grocery so chain, following the death of Giant’s Chairman Israel Cohen. The London company is anxious to boost its share of the Northeast US. market. In 1994, Sainsbury paid $325 million for 16o of Giant’s non-voting stock along with the voting shares held by the Lehrman family, descendants of a Giant founder.

Softkey acquires an ally in bid for Learning Co,

The Tribune Company has committed itself to a $150 million investment if Softkey International Inc.’s hostile bid for the Learning Company should be successful. The $150 million would be in 55 percent convertible debentures due in the year 2000 which would be convertible into Softkey common stock at a price of $53 a share. These debentures are in addition to a $350 million offering which Softkey made at the same terms in October, adding $500 million in debt to the company’s balance sheet.

In addition, Softkey has also agreed to purchase Compton’s New Media Inc. from Tribune for stock valued at $106.5 million. Recently, Fremont, Ca.-based Learning Company had rebuffed Softkey’s unsolicited tender offer and agreed to merge with Broderbund Software Inc. in a stock swap transaction wit a price tag of $560.4 million, subject to shareholder approval.

Although Softkey tends to reduce the staffs of the companies it purchases, Broderbund has promised keep Learning Company management in place. Industry observers predict that the Tribune deal will fortify Softkey’s position.

On the other hand, the Tribune Company stands to increase its distribution. Analysts also say that Broderbund’s only choice is to increase their stock price, ideally up to $70. The Learning Company is well known for its educational programs including he popular Reader Rabbit. Learning Company shareholders are to vote on the Broderbund deal on Dec. 11.

NUI plans against takeover bids

Although there is no known suitor at the present time, the board of NUI Corp., a natural gas distributor is not taking any chances. It has adopted a shareholder-rights plan, making hostile takeovers prohibitively expensive. According to its provisions, each right permits shareholders to purchase one-hundredth of a share of NUI union participating preferred stock at an exercise price of $50.

Copyright Quality Services Company Dec 11, 1995

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