|
Crane sues over Coltec deal
|
 |
December 15, 1998: 1:37 p.m. ET
Suit charges Coltec-BFGoodrich merger breaches pact with Coltec
|
NEW YORK (CNNfn) - Crane Co. said Tuesday it is suing to block BFGoodrich Co.'s pending $1.2 billion takeover of Coltec Industries Inc. until Coltec's board has properly considered Crane's own takeover bid, which is about 21 percent higher.
In response, BFGoodrich said Tuesday the company has a binding agreement with Coltec and intends to proceed with the merger.
"We believe the agreement involves a fair offer that has been accepted by the board of both companies, and that the merger is in the best interests of BFGoodrich shareholders," Rob Jewell, a company spokesman, told CNNfn. Jewell declined to elaborate further, citing company policy that bars commenting on pending litigation.
Crane, an aerospace- and industrial-products maker based in Stamford, Conn., said it has filed a complaint in U.S. District Court to enjoin BFGoodrich (GR) from proceeding with a merger that Crane (CR) asserts breaches the terms of a pact that Coltec (COT) and Crane reached Oct. 31, 1995.
That accord, Crane asserts, obligated Coltec to notify Crane promptly in the event that any third party approached the company with an offer of a merger or other business combination.
BFGoodrich, based in Richfield, Ohio, launched merger talks with Coltec in October and reached an acquisition agreement Nov. 23. Goodrich, formerly known for its tires, spun that business off in the 1980s and now focuses on aerospace products and specialty chemicals.
In the deal, Coltec shareholders would receive 0.56 Goodrich share for each Coltec share, valuing Coltec shares at $20.13 each for a total value of just over $2 billion at the time.
Since then, a decline in Coltec's stock price to $18.48 has reduced the value of the deal to about $1.2 billion.
In letters dated Sept. 24 and Nov. 20, however, Crane countered with an offer of 0.8 share of Crane, valued at $22.40 per share for each Coltec share, for an aggregate value of about $1.45 billion.
BFGoodrich officials couldn't immediately be reached for comment Tuesday.
Crane said Tuesday that its own offer represented a 34.2 percent premium over Coltec's closing stock price of $16.69 on Dec. 14, 1998, and 21.2 percent more than the implied value of Coltec's merger with B.F. Goodrich.
"Coltec's failure to give Crane notice deprived Crane of the valuable right to present fairly a competing proposal to the Coltec board of directors, a right for which Coltec bargained and to which Coltec agreed," Robert Evans, Crane's chairman and chief executive officer said Tuesday.
Evans added the lawsuit is intended to "put Crane back on a level playing field without the anti-takeover impediments erected by Coltec and Goodrich."
In its lawsuit, filed in U.S. District Court for the Southern District of New York, Crane seeks to force BFGoodrich to disavow its lock-up option and termination fee "as arising from the tainted and misinformed process" outlined in the complaint.
The lock-up option allows Goodrich to buy 19.9 percent of Coltec stock at $20.125 a share.
Crane insists it isn't seeking to pre-empt Goodrich as a bidder, but merely to ensure an equitable takeover process.
The statement added: "We believe that the merits of a Crane-Coltec merger are clear and that there are substantial cost savings to be achieved in such a combination…We believe that, given the economic power of Crane's proposal, the Coltec shareholders will reject the lower-valued BFGoodrich merger."
Shares of BFGoodrich were up 11/16 at 33-11/16 Tuesday afternoon on the New York Stock Exchange, while Crane stock was off 1-3/16 at 26-13/16. Coltec shares had risen 1-7/8 to 18-9/16 by early afternoon.
|
|
|
|
|
 |
|
