AMC Board Postpones Annual Meeting
DETROIT (AP) _ American Motors Corp.‘s board of directors met Friday to discuss Chrysler Corp.’s buyout proposal and decided to postpone the annual meeting where shareholders would vote on the deal, an AMC spokesman said.
No decision was reached on the proposal and no date has been set for rescheduling of the postponed April 29 annual meeting, said AMC spokesman Jerry Sloan.
Chrysler announced March 9 that it had agreed to buy French government- owned Renault’s 46.1 percent interest in AMC and has offered to swap about $4 worth of Chrysler stock for each of the other outstanding AMC shares.
AMC common stock has stood at about $4.25 a share since the deal was announced. Its price has been boosted by speculators’ hopes that Chrysler will sweeten its offer, said analyst Ronald Glantz of Montgomery Securities Inc. in San Francisco.
The AMC board, which met at an undisclosed location in New York City, opted for the postponement so that it could combine the regular shareholders’ meeting with a vote on the Chrysler deal, Sloan said.
AMC last week hired Shearson Lehman Bros. in New York as a consultant on the buyout and is still gathering information and recommendations. The board of directors will continue to meet periodically until it decides whether to accept the offer as proposed.
The shareholders’ meeting was delayed so that following a board decision AMC will have time to assemble a proxy, send it to the Securities and Exchange Commission for review, and then send it to shareholders for a vote, Sloan said.
Sloan said he was unable to disclose how far AMC has progressed in its examination of the proposal. The board apparently won’t be ready to make a decision for about a month.
But AMC’s decision will make little difference either way, Glantz said.
″Politically, getting out of American Motors is popular for Renault. It’s conceivable that Chrysler would get only (Renault’s shares), but that’s enough,″ he said.
″That gives Chrysler control of the company and gives Chrysler access to Jeep and access to AMC dealers, and that’s what Chrysler wants.″
In addition to Renault’s 46.1 percent of AMC’s voting stock, Renault has non-voting convertible stock and warrants to buy stock which, if converted into voting stock, could give Renault as much as 66.46 percent of AMC, said AMC spokesman Edd Snyder.
AMC’s lack of an immediate response either way to the Chrysler offer is not unusual, Glantz said.
″This is the normal game that a company plays,″ he said.
AMC could be looking for alternatives, perhaps another buyer, although it’s unlikely one will turn up, said Thomas O’Grady, analyst with Integrated Automotive Resources Inc. in Wayne, Pa.
The automaker also may be delaying taking the deal to shareholders because it believes they are ″quite willing and anxious″ to approve the deal, O’Grady said.
″We’re just being prudent,″ Sloan said. ″We’re going through the steps the correct way rather than doing anything rash.″
Glantz said AMC’s shareholders would be wise to accept the offer considering the $839 million in losses the automaker has accumulated in the last six years and the cyclical nature of Jeep’s business, AMC’s only profitable operation.
″I think if shareholders refuse to sell, they could be cutting off their noses to spite their faces,″ he said.