Takeover Offer ‘Inadequate,’ Whittaker Says

Whittaker Corp. said Monday that it has rejected a $318-million takeover offer by a New Jersey investment firm as “inadequate and not in the best interests of shareholders.”

The investment firm, Caiola Associates, said it will continue to pursue Whittaker, a conglomerate based in Los Angeles.

Whittaker said it will consider alternatives “consistent with its fiduciary duty to stockholders,” raising speculation that management might make its own offer for Whittaker. The company’s directors also adopted a defense plan, commonly known as a “poison pill,” that allows shareholders to buy company stock at half price in case of a takeover attempt.

The $47.50-a-share cash offer was made Oct. 31 by Caiola Associates, a Mountainside, N.J., investment firm that has said it owns 4.9% of Whittaker’s 6.7 million common shares.

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Louis K. Caiola, the head of the firm, said the company’s principals “regret that the Whittaker board rejected our offer as ‘inadequate,’ without speaking or providing information to us, which may have enabled Caiola Associates to increase our share price.”

“At the time of our proposal . . . Whittaker’s share price was approximately $37.75 on the open market,” Caiola said in a statement. “We believe our proposed transaction offers maximum value to shareholders.”

A Whittaker spokesman declined to say what alternatives Whittaker might examine. However, a management-sponsored leveraged buyout would be a likely step, said Larry Selwitz, an analyst with the Newport Beach investment banking firm of Cruttenden & Co.

Whittaker consists of two divisions--specialty chemicals and technology products for the defense, aerospace and automotive industries.

The company’s stock closed at $42 a share Monday on the New York Stock Exchange, up 25 cents.