AFG Partners Renews Its $85-a-Share Offer to Acquire Lear Siegler

AFG Partners investment group Wednesday renewed its $85-a-share offer for the Lear Siegler conglomerate, one day after Wickes Cos. abandoned its $93-a-share deal to acquire the firm.

AFG Partners said in a letter to Lear Siegler’s board of directors that it still wants to acquire the Santa Monica company, which has interests in specialty glass, aerospace and automotive equipment.

However, AFG Partners, also said it might be interested in buying certain businesses from Lear Siegler if the company goes ahead with a previously announced restructuring in preference to the proposed takeover. It did not identify the businesses, but the partners had previously expressed interest in Lear Siegler’s glass and automotive operations.

Bid Subsequently Dropped

AFG Partners was formed by Irvine glass manufacturer AFG Industries and by Wagner & Brown, an oil and gas partnership based in Midland, Tex. AFG Partners made its first offer for Lear Siegler nearly two months ago but dropped the bid when Lear Siegler agreed to be acquired by Wickes. At the time, AFG sold a 9.8% stake in Lear Siegler to Wickes for $91 a share, making a profit of $32 million.

But since then, AFG Partners has acquired a new 4.7% stake in Lear Siegler. Lear Siegler made no comment on the AFG letter but a spokesman said the company is exploring its options, which include such possibilities as a recapitalization, the sale of certain businesses, or a merger.

The partnership also said it is willing to assist in a Lear Siegler restructuring. “We would be willing to provide equity for a value-making restructuring, purchase assets to be disposed of in such restructuring or participate by some other means. . . . “

The letter does not say which businesses the partnership would be willing to buy. But AFG Partners said previously that it would sell Lear Siegler’s specialty glass division to AFG Industries following a takeover by the partnership. AFG Partners also disclosed plans to run Lear Siegler’s automotive and materials-handling businesses.

Thomas O. Lloyd-Butler, an analyst who follows Lear Siegler for the Montgomery Securities investment firm in San Francisco, said he believes that AFG Partners will succeed with its new takeover offer. “I think AFG has got this pretty well wrapped up,” he said. “I suspect they’ll pay Wickes $91 for the shares they sold them, and get the rest for $85.”

AFG Partners renewed their offer for Lear Siegler after the market closed on Wednesday. Lear Siegler’s share price fell $1.50 to $82 in composite trading on the New York Stock Exchange earlier in the day in wake of an announcement by Wickes Cos. that it was abandoning its $1.7-billion cash offer for the company. Wickes canceled the deal on Tuesday because it couldn’t obtain financing.

John N. Simon, an analyst who follows Lear Siegler for the Seidler Amdec investment firm in Los Angeles, said that Lear Siegler’s shares are trading below the $85 a share offered by AFG Partners because “the market doesn’t believe AFG can get the financing. If Wickes can’t get it, why should they?”

As previously announced, AFG said it would finance the acquisition with $250 million of its own equity, and $600 in junk bond financing placed through the Bear Stearns & Co. New York investment firm. The partnership said that it also had arranged for a $400 million loan from a major commercial bank, and another $450 million would be raised through a banking syndicate on a “best efforts” basis.