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Federal Mogul rebuffed
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January 25, 1999: 3:17 p.m. ET
LucasVarity rejects U.S. firm's $6.4B takeover offer; Mogul still interested
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NEW YORK (CNNfn) - Federal-Mogul Corp. hit a roadblock in its attempt to buy British auto parts maker LucasVarity Monday, but the U.S. company said it isn't making a U-turn.
The Southfield, Mich.-based company said that even though London-based LucasVarity (LVA) had rejected its roughly $6.4 billion offer, Federal Mogul still is interested.
Shares of LucasVarity jumped 6-1/4 to 42-1/2 in afternoon trading.
"We strongly urge you to reconsider your position," Federal-Mogul (FMO) Chairman and CEO Dick Snell said in a letter to LucasVarity executives.
Snell had told LucasVarity chairman Edmund Wallis and CEO Victor Rice that Federal-Mogul was considering acquiring LucasVarity at 280 pence per share. The U.S. company said the stock-and-cash offer would "represent a premium of 40 percent to LucasVarity's closing share price on Dec. 30, 1998."
LucasVarity's response, Federal-Mogul said, was that it "was not willing to enter into discussions with Federal-Mogul."
LucasVarity reportedly has been holding separate merger discussions with TRW (TRW) and Tenneco (TEN), which Snell mentioned in his letter to Wallis and Rice.
"I'm genuinely disappointed and surprised at your decision not to allow us to proceed with due diligence on LucasVarity," Snell wrote. "Given your recent public confirmation that you are in preliminary discussions with a number of companies…we had hoped that Federal-Mogul would also be allowed to participate in discussions with LucasVarity."
Snell said there are compelling merits for combining the two companies, claiming it would "create a formidable, world-class company."
Federal-Mogul said it believes that "LucasVarity shareholders should be entitled to be made aware of this proposal and regrets the current stand taken by the LucasVarity board."
Federal Mogul was down 1-5/8 at 61-5/8 in early afternoon trading. 
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