Cooper Industries Inc., a Houston-based manufacturing company, said Monday that it would make a $65-per-share bid to acquire McGraw-Edison Co. in a deal worth about $1.4 billion.
The proposed offer, to begin Wednesday, comes after Forstmann Little & Co. on Friday agreed in principle to buy McGraw-Edison for $59 a share in a leveraged buy-out worth $1.3 billion. The leveraged buy-out, financed primarily by borrowing, would have been the largest on record.
"We feel the company is worth more than that, so we have gone public and stated we will offer $65 for any and all shares," Cooper Vice President Robert B. Dyer said.
Unlike Forstmann Little's proposed transaction, Cooper's offer is more routine in that it is a takeover attempt.
McGraw-Edison, of Rolling Hills, Ill., had no comment on the Cooper bid.
"We have heard the news here," said Ruth Coates, manager of financial communications. "We don't have any formal statement.
"All of our management is in New York City today. I have the feeling there is still some negotiating. It's all happened very fast."
Dyer said: "They were advised before the offer was made public."
At Forstmann Little in New York, a receptionist who refused to identify herself said no one was available at the investment partnership to comment on the Cooper action.
Cooper, a 152-year-old organization, manufactures tools and hardware, compression and drilling equipment and electrical and electronic equipment.
Revenue in 1984 was $2.03 billion, up from $1.85 billion in the previous year, with $107 million in profits last year, up from $71 million in 1983. Earnings per share climbed to $2.12, up 66% from $1.28 in 1983.
Dyer said the Forstmann Little proposal last week prompted Cooper to act.
"That, in effect, put it up for sale officially," he said. "We had had conversations with McGraw-Edison before, within the past couple of weeks or so. But there was nothing conclusive."
Dyer said that Cooper has been "very active in acquiring other companies over the years. Beginning principally in 1967, we made our first move into a new area that became our tool and hardware business and built into a respectable business."
Both companies are strong in their market segments and are highly complementary in their product lines, he said. "There's a lot of compatibility," he said.
Cooper has 118 manufacturing plants around the world, including facilities in 41 states and 30 foreign counties. It has more than 30,000 employees.
The Wall Street Journal reported Monday that, under the Forstmann Little proposal, McGraw-Edison's management would remain in place. Dyer said it was too soon to speculate what could happen to McGraw-Edison management if the Cooper takeover succeeds.