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Florida RR blasts tender offer
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January 11, 1999: 4:53 p.m. ET
Florida East Coast Industries warns of tender offer by IG Holdings Inc.
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NEW YORK (CNNfn) - A privately-held Arizona company with a history of making unsolicited - and unsuccessful - tender offers has another company in its sights.
Phoenix-based IG Holdings Inc.'s latest target is railroad and real estate company Florida East Coast Industries Inc. (FLA). The St. Augustine, Fla., company issued a statement Monday urging shareholders to reject a tender offer by IG Holdings.
FECI joins such companies as Greyhound Lines Inc. (BUS), Friendly Ice Cream Corp. (FRND), Jameson Inns (JAMS) and Station Casinos Inc. (STN) that IG Holdings has targeted over the last several months.
The FECI case seems to follow a typical scenario. The company said IG Holdings did not inform FECI about the tender offer and the company only learned about the offer from brokers who contacted the company.
"FECI strongly recommends that its shareholders reject the tender offer due to inadequate price," the company said in a statement. "The tender offer price of $30 offered by IG Holdings on Dec. 23 is substantially lower than the closing price of $35.125 for FECI common stock on (the) New York Stock Exchange on the day before the offering."
In their Sept. 4 press release, Greyhound said its closing price on Sept. 3 was 16 percent above the IG Holdings offer price.
IG Holdings is headed by Ira Gaines of Phoenix. Gaines declined comment Monday.
Heddi Eddins is familiar with IG Holdings. Eddins, vice president/secretary and general counsel of Providence & Worcester Railroad Co. (PWX) in Worcester, Mass. said Gaines made a similar move on her company.
"I do not believe any of our shareholders participated," she said. "He never bothered to tell the company."
As with FECI, Eddins said her company issued a press release urging shareholders not to accept IG Holdings' offer. Many other companies have followed this routine.
Typically, IG Holdings never offers to buy more than 4.9 percent of outstanding stock, thus avoiding having to file disclosure information with the U.S. Securities and Exchange Commission.
Bret Jordan, a director at Advest Inc. in Boston, said Gaines' company seems to focus on companies that don't trade very much.
"I can't imagine he's had much luck," Jordan said. "There are very few people who will sell to him. But he keeps doing it. If anybody does sell, he makes a substantial amount of money."
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