IU Ends Two-Month Fight Against Neoax; Agrees To Buyout
PHILADELPHIA (AP) _ After a two-month fight that saw IU International Corp. repeatedly spurn buyout offers from Neoax Inc., the diversified companies have agreed to a merger valued at nearly $610 million.
The companies announced Sunday that Neoax had agreed to pay $22.25 per share for each of IU’s 27.4 million common shares outstanding.
Neoax, a Stamford, Conn.-based manufacturing concern, had sweetened its offer on Friday from $22 per share, and the two sides began negotiating an agreement, the companies said in a joint news release.
IU’s board of directors, which had recommended its stockholders ignore Neoax’s earlier bids, unanimously endorsed the latest offer.
IU shares rose 12 1/2 cents to $22 Friday on the New York Stock Exchange. Neoax rose $1.75 to $9.25 a share in national over-the-counter trading.
IU, a Wilmington, Del., diversified services company with executive offices in Philadelphia, had been fighting Neoax since Jan. 6, when the Connecticut firm launched a $17.50-a-share offer for IU.
IU on Feb. 23 agreed to a $21.50 a share leveraged buyout led by members of management and the investment firm Dean Witter Capital Corp., but Neoax quickly raised its bid to $22 a share and the leveraged buyout proposal later was withdrawn.
Neoax’s new offer will expire at 9 a.m. EST March 21, according to Neoax spokesman Joe Mansi. As of Sunday, Neoax had received tenders of about 1.2 million IU shares under its tender offer.
IU was founded 64 years ago in Philadelphia as a holding company for electric and gas utilities in the United States and Canada. By the early 1980s the company had evolved into one of the country’s biggest trucking companies. Its current businesses include paper and food distribution, trucking and environmental services, including waste management and slag recovery at steel mills.
Neoax is the former White Motor Corp., a major manufacturer of large trucks. It sought protection under Chapter 11 of of the Federal Bankruptcy Act in 1980, emerging 3 1/2 years later as Northeast Ohio Axle Inc., which was changed to Neoax in 1986. It has acquired 11 manufacturing operations since 1983.
Neoax indicated last month that it had received $383 million in short-term ″bridge″ financing from Drexel Burnham Lambert Group Inc. for the buyout.
IU in 1987 posted a profit of $13.5 million, down from $88.3 million a year earlier, on revenue of $1.57 billion, up from $1.35 billion in 1986.
The 1987 results included a $12.7 million loss on the sale of certain operations, while the 1986 results included a $12.8 million gain from the sale of some operations, a $40 million tax credit and a $1.8 million gain from an accounting change.
Profits from continuing operations rose to $28.6 million from $22.4 million in 1986.