United Dominion Raises Offer To Buy Commercial Intertech
March 28, 2011
United Dominion Industries Ltd., turning up the heat in its pursuit of Commercial Intertech Corp., raised its tender offer to $30 a share and criticized the target's strategic plan to remain independent. The latest offer, which amounts to an increase of $3 a share over United Dominion's previous bid, is expected to put pressure on management at Commercial Intertech, a Youngstown, Ohio, manufacturing concern, to come to the table to negotiate, Wall Street analysts said. ``It was a fully priced offer at $27 a share,'' said Margarete Cornish-Harriman, an analyst with Scotia Capital Markets in Toronto, adding that United Dominion, a Charlotte, N.C., maker of industrial and building products, is ``now into sharing considerably with Intertech shareholders the synergies they'd get from the combination.'' Commercial Intertech had about 15.5 million shares outstanding before a plan to buy back 2.5 million shares was unveiled last week. Based on 15.5 million shares, the proposed transaction has an indicated value of roughly $465 million. The deal also would include the assumption of some $88 million in debt. Commercial Intertech said its board will ``promptly review United Dominion's revised offer,'' and urged holders to wait for the board's recommendation before deciding whether to tender shares. In New York Stock Exchange composite trading Monday, Commercial Intertech's shares climbed 50 cents to $29.125 amid a broad market sell-off. United Dominion's higher offer Monday followed quickly on the heels of Commercial Intertech's move last Friday, in which it rejected the $27-a-share offer and unveiled its defense strategy: the buyback and the spinoff to shareholders of Cuno Inc., its filtration unit, which the parent hopes will trade at a higher stock multiple once it's a separate entity. Monday, United Dominion sharply criticized Commercial Intertech's efforts to evade it, charging that Commercial Intertech's board had previously rejected the idea of a 100% spinoff of Cuno, and that Commercial Intertech hadn't obtained approval of shareholders or a ruling from the Internal Revenue Service as to whether the spinoff to shareholders would be tax-free. Moreover, United Dominion said it sent a letter to the Securities and Exchange Commission on Friday, complaining that Commercial Intertech's buyback plan was discriminatory to its shareholders, because it wasn't fully disclosed before the company began buying back shares on Friday, mostly from arbitragers and large institutional investors. Commercial Intertech declined to comment on the criticisms.
