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Midcon Corp. Targeted In Joint Takeover Bid

December 16, 1985

NEW YORK (AP) _ Wagner & Brown and Freeport-McMoRan Inc. today announced that they have jointly launched a $2.6 billion attempt to acquire Midcon Corp.

Besides the $62.50 a share cash offer for Midcon’s shares outstanding, the partnership also wants to purchase all Midcon’s 101/4 percent subordinated convertible debentures due 2009 for $1,488.10 cash for each $1,000 face amount.

After the tender offer, Wagner & Brown and Freeport, which united as WB Partners to pursue Midcon, proposed a merger in which the remaining Midcon stock would be exchanged for cash.

Patricia Wees, a spokeswoman at Midcon’s headquarters in Lombard, Ill., said the oil and natural gas pipeline company is studying the unsolicited bid.

″We are also studying our options,″ she said, but did not elaborate.

Midcon last week completed the acquisition of United Energy Resources Inc., based in Houston. The cash and stock transaction valued at $1.14 billion was widely viewed as a move to shield Midcon from hostile pursuers.

Wagner & Brown, based in Midland, Texas, is an oil and gas concern. Freeport, with headquarters in New Orleans, is also in the energy business. Officials at both companies could not be reached for comment.

But in their announcement, they said they would run Midcon as a separate corporation, maintaining its name, present headquarters and operations.

″A key part of our plan for MidCon is that existing management continue in the same executive functions under the guidance of a board of directors elected by WB Partners that would include management and independent representatives,″ they said.

The announcement said that based on outstanding Midcon shares and debentures, the acquisition would cost about $2.6 billion. Wagner & Brown and Freeport began accumulating Midcon stock earlier this year and now hold approximately 1.93 million shares, about a 4.4 percent stake, a spokesman for the partners said.

The deal is to be financed with a bank loan and the sale of securities.

Drexel Burnham Lambert Inc. has been hired to handle the securities portion of the financing.

The New York investment house, which specializes in high-yield high-risk securities financing, called ″junk″ bonds, has said it would be able to place the securities before December 31.

Restrictions on the use of junk bond financing, stemming from a policy interpretation recently made by the Federal Reserve Board, goes into effect next year.

The offer for Midcon expires at 1201 a.m. Jan. 15.

As of Sept. 30, there were 30.5 million Midcon shares outstanding. Midcon recently authorized the issuance of up to 8.9 million more shares and the convertible debentures would translate into 2.3 million shares.

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