Danaher Begins Hostile Tender For Exide

Danaher Corp., spurned in a friendly takeover bid for Exide Electronics Group Inc., Wednesday began a hostile $202 million tender offer for the maker of power supply systems and business software.

Danaher began its $20-a-share tender offer for Exide after its friendly overtures, including one for $22 a share, were rejected by Exides board. Exide responded by telling shareholders to not tender their shares, and that the company would respond to the Danaher offer within 10 business days.

The $20-a-share bid would total about $202 million for all of Exides 10.1 million outstanding shares. However, the company also has about $220 million in outstanding debt.Exides stock jumped $7.75 to $20.625 on Nasdaq while Danaher rose 6 cents to $49.875 on the NYSE.

 

In announcing the tender offer, Washington-based Danaher said it was disappointed that Exide refused to consider its friendly offer, made on June 11.

While we continue to strongly prefer a negotiated transaction, in light of the responses from your board of directors, we feel compelled to pursue this matter more expeditiously, Danaher said in a letter to Exide that it made public in announcing the tender offer.

The offensive also includes calling an Exide shareholder meeting and filing a lawsuit to force a transaction. Danaher, which makes tools, environmental controls and transportation products, said it already owns about 397,000 of Exides 10.1 million shares. Duquense Enterprises, an investment arm of utility DQE Inc., owns 1.1 million Exide shares, or about 10.9 percent.

Wall Street analysts said hostile bids have worked for Danaher before and may force Exide into the arms of a friendly buyer, analysts said.

Danaher is an extraordinarily well-run business. It has a long history of doing bear hug deals and they are thorough.

Since 1990, they have made about 25 acquisitions and all have been accretive in the first year, said NatWest analyst Cliff Ransom.

DQE, based in Pittsburgh, is a leading candidate to become a white knight Exide buyer, analysts said. American Power Conversion Corp., which competes with Exide, was also cited as a potential friendly buyer. An APC spokeswoman was not immediately available to comment.

Interstate Johnson/Lane analyst Dimitri Triantafyllides said Exide was defending itself from a position of financial weakness. Exide has had a lot of growth through acquisitions and has assumed a lot of leverage in doing so.

That has hurt their bottom line and near-term performance, he said.

Danahers move, called a bear hug on Wall Street, is designed to create pressure from shareholders and force the target companys board into accepting a takeover bid.

The move has put Exide into play, analysts said, and it is likely the Raleigh, N.C-based company will be bought by Danaher or a white knight, analysts said.