GAF Directors Rebuffed Buy-Out Bid For $2.3 Billion as Too Low, Sources Say
NEW YORK -- A committee of independent directors of GAF Corp. has told Samuel J. Heyman, the company's chairman, that his $2.3 billion management buy-out proposal is inadequate, sources close to the board said.</br></br>The sources said the four-member committee told Mr. Heyman Tuesday it wasn't likely to approve any offer for GAF below $70 a share -- $3.50 a share higher than Mr. Heyman's bid. As previously reported, Mr. Heyman proposed to take the Wayne, N.J.-based specialty-chemicals and building materials concern private for $64 in cash and $2.50 face value in debt securities for each share of GAF stock. The committee was formed to evaluate the proposal.</br></br>It isn't unusual for directors to rebuff a first acquisition proposal for a company. Many analysts have expected that Mr. Heyman will have to boost his bid for GAF to succeed in buying it.</br></br>Sources close to GAF's board, however, said Mr. Heyman still is trying to convince the committee his offer is a fair one. He has told board members that with interest rates rapidly rising, a higher bid for GAF would be more costly and difficult to finance, the sources added.</br></br>Since early last month, when Mr. Heyman first proposed the leveraged buy-out, GAF's board and management have kept mum about it. As previously reported, the committee hired Salomon Brothers Inc. to help evaluate the proposal. Directors haven't set any time limit for accepting or rejecting the bid.