GAF's Heyman Seeks Public Partners by Sale of 18% Interest in Unit, Arouses Skepticism
NEW YORK -- Of Samuel Heyman, it might be said that his record in running GAF is surpassed only by his sense of market timing.</br></br>It was evident when he took GAF private, cutting his price by 20% after the 1987 stock market crash and seizing his opportunity at a time when his prowess as a raider deterred potential rivals. Now, stock offerings have returned to fashion, and Mr. Heyman wants the public as his partner.</br></br>He aims to sell 17.4 million new shares, or 18%, of GAF's crown jewel, a specialty chemicals maker known as International Specialty Products. The offering document forecasts a price of roughly $14.50 a share -- a cool 29 times 1990 earnings of 49 cents a share.</br></br>Merrill Lynch, the lead underwriter, won't comment; nor will Mr. Heyman. But if the underwriters -- who launch a marketing blitz today -- follow form, they will, in their first breath, assert that the multiple is a good deal lower relative to earnings estimates for this year and beyond. They will add that International's earnings would be 19 cents a share higher were it not for goodwill and depreciation charges related to its 1989 leveraged buy-out. They will note that insiders aren't selling. And, one expects, they will talk about International's heady, sustained growth.</br></br>Before World War II, International's parent, GAF, was a unit of the German I.G. Farbenindustrie. It was seized by the U.S. in 1942, owned by the feds for 23 years and sold to the public in 1965. The company's strength is said to derive from its German technology, but its performance didn't take off until Mr. Heyman won control in a proxy fight in 1983. During the past eight years, the prospectus notes, "net sales and operating income have increased at average annual compound rates in excess of 13% and 25%, respectively."