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Gulf & Western Industries Inc. said it plans to begin a $70-a-share tender offer for Prentice-Hall Inc. after trying unsuccessfully for four months to meet with executives of the Englewood Cliffs, N.J., publisher.
Prentice-Hall executives finally did agree to a meeting, which occurred yesterday morning, when G&W made it clear that it would proceed with an offer for the company. In a statement, Prentice-Hall's president and chief executive officer, Donald Schaefer, said that the company had received an "unsolicited offer" in the meeting yesterday and that its board would meet later this week to consider the proposal. Mr. Schaefer cautioned shareholders "not to act hastily with respect to their investment" in Prentice-Hall.
G&W didn't buy any shares during recent months while it was attempting to meet with Prentice-Hall officials, apparently because Mr. Davis didn't want to appear as a hostile suitor. It isn't clear whether Prentice-Hall will fight G&W's offer now. Prentice-Hall executives couldn't be reached for comment yesterday.
NEW YORK -- Gulf & Western Industries Inc. said it plans to begin a $70-a-share tender offer for Prentice-Hall Inc. after trying unsuccessfully for four months to meet with executives of the Englewood Cliffs, N.J., publisher.
Announcement of the proposed $700 million offer sharply boosted Prentice-Hall's stock price. In composite trading on the American Stock Exchange, the company's common closed at $70, up $18.25.
Prentice-Hall executives finally did agree to a meeting, which occurred yesterday morning, when G&W made it clear that it would proceed with an offer for the company. In a statement, Prentice-Hall's president and chief executive officer, Donald Schaefer, said that the company had received an "unsolicited offer" in the meeting yesterday and that its board would meet later this week to consider the proposal. Mr. Schaefer cautioned shareholders "not to act hastily with respect to their investment" in Prentice-Hall.
Prentice-Hall's approximately 10 million shares outstanding are held about 52% by institutions and 20.3% by members of the company's founding family. Richard P. Ettinger, a family member and a director, has 12.5%, the largest holding among family members. Family members couldn't be reached for comment, though it is understood that G&W has been in contact with them.
Martin Davis, chairman and chief executive of G&W, is said to be determined to pursue the acquisition of Prentice-Hall, one of the largest publishers of college textbooks, as part of his plan to expand G&W's communications and entertainment businesses. Acquiring Prentice-Hall could make G&W the largest book publisher in the country.
G&W already owns Simon & Schuster, the nation's sixth largest publisher, and in February acquired the 73% it didn't already own of Esquire Inc., a publishing, film and video concern, for $179.6 million.
G&W didn't buy any shares during recent months while it was attempting to meet with Prentice-Hall officials, apparently because Mr. Davis didn't want to appear as a hostile suitor. It isn't clear whether Prentice-Hall will fight G&W's offer now. Prentice-Hall executives couldn't be reached for comment yesterday.
The company is said to be considering attempts to line up a potential white knight, or friendly suitor, and possibly get a better price from G&W. Prentice-Hall hired the investment firm of Dillon, Read & Co. and the law firm of Cravath Swaine & Moore. There was speculation yesterday that Dillon Read will shop around for a better bid, possibly prompting G&W to sweeten its offer. But sources close to G&W said the company is unlikely to exceed its $70 offer.
After executives of Prentice-Hall met with Mr. Davis yesterday morning, G&W sent the company a letter containing the announcement that it would proceed with a tender offer later this week. G&W said the offer won't be conditioned upon the tender of any minimum number of shares. In the letter, Mr. Davis said, "I have made numerous requests over a period of several months that you and I meet to explore and discuss fully our proposal for a cash merger."
In the meeting yesterday with Prentice-Hall management, G&W discussed offering $68 a share. But according to a G&W spokesman, "In our announcement of the decision to make a cash tender, we decided to go to $70."
In his letter, Mr. Davis said that "joining our companies would be in the best interests of the shareholders of both Prentice-Hall and G&W," and that "the compelling operational and market logic of such a business combination would benefit the employees, authors and customers served by both companies."
In the letter, Mr. Davis also said that G&W would "maintain the name and separate identity of Prentice-Hall" and keep its management team.
Mr. Davis's aim is to combine Simon & Schuster's expertise in the trade and mass market publishing areas and its Allyn & Bacon unit in elementary and high school markets with Prentice-Hall's operations in college and professional textbooks. "Simply put, the combination will be a major force in virtually every important aspect of the book publishing business," Mr. Davis said in his letter.
In 1983, Prentice-Hall had net income of $39 million, or $3.93 a share, on revenue of $448.2 million. In the first nine months of 1984, net fell to $20.6 million from the year-earlier $24.3 million, while sales increased to $345.5 million from $314.5 million. The company recently has invested heavily in computer software businesses.
G&W said it would make the acquisition through a combination of internally generated cash and borrowings. For its fiscal year ended July 31, G&W reported earnings from continuing operations of $263.3 million on revenue of $4.1 billion. Its publishing operations had operating earnings of $31.6 million on revenue of $285 million.
The Prentice-Hall offer apparently fueled a rise yesterday in the stock prices of some publishers on the New York Stock Exchange. Macmillan Inc. gained $2.875 to close at $44.875. Harper & Row Publishers Inc. was up $2, at $25.375. Harcourt Brace Jovanovich Inc. added $1.75 to close at $42.25. All three finished at 52-week highs.
Harcourt Brace's chairman, chief executive and president, William Jovanovich, said that he wasn't aware of any specific reason for the strength and that "nobody's taking over this company, I can assure you."
Credit: Staff Reporter of The Wall Street Journal
Copyright Dow Jones & Company Inc Nov 6, 1984