Robertshaw Controls Seeking Buyer; Stock Soars
RICHMOND, Va. (AP) _ Robertshaw Controls Co. said Wednesday it is for sale, which sent the price of its stock soaring by nearly 33 percent.
Robertshaw, which said it retained the investment firm Goldman, Sachs & Co. to seek a buyer, is a leading manufacturer of automatic controls used in residential and commercial buildings, appliances and cars.
Reynolds Metals Co., also based in Richmond, owns 41 percent of Robertshaw’s common stock.
Robertshaw’s announcement clearly surprised Wall Street. The company’s soared $14.87 1/2 a share to $61.50 in New York Stock Exchange composite trading.
At that price, Robertshaw is worth about $338.3 million; the company has about 5.5 million common shares outstanding.
Michael Mead, director of research at the investment firm Scott & Stringfellow Inc. in Richmond, estimated Robertshaw would fetch between $60 and $68 a share.
Robertshaw did not indicate what price it would seek, and it cautioned that there was no assurance a deal would be completed.
But Robertshaw is seeking a buyer in an effort to ″ensure that the value of the company is maximized for all shareholders,″ said Robertshaw spokesman Robert Pendergast.
The stock market’s response to the announcement ″has indicated that the real value to shareholders is substantially more than $46.62 ″ a share, he said, referring to Robertshaw’s closing stock price Tuesday.
Pendergast declined comment when asked why Robertshaw did not try to enhance shareholder values in some way other than by selling the whole company.
But some analysts said they had little doubt that the decision to sell the company was made by Reynolds Metals, whose president and chief executive, William O. Bourke, also is chairman of Robertshaw.
Louis C. Hannen, an analyst for Wheat, First Securities Inc. in Richmond, said Reynolds Metals likely decided it could better use the proceeds from its Robertshaw stake in other areas.
″Reynolds thinks their balance sheet could use some improvement, or they have an acquisition of their own they want to make,″ Hannen said.
And rather than sell only its stake, Reynolds Metals also probably decided to allow all of Robertshaw’s stockholders to receive the same bid for their stock, the analysts said.
Reynolds Metals spokesman Robert Shaffer declined comment on Robertshaw’s announcement.
Robertshaw’s announcement came one day after the company posted a 16 percent drop in first-half 1986 profit compared with a year earlier. Six-month net income fell to $10.9 million from $13 million, while sales rose to $217.1 million from $207.9 million.
Still, Hannen of Wheat First said Robertshaw’s outlook for the second half of the year is strong, and that overall the company is for sale ″at a time when earnings are at peak levels″ relative to the past 15 years.