NEW YORK (AP) - GAF Corp. announced Monday it will attempt to take
over Union Carbide Corp. in a $4.12 billion, two-pronged bid for the
90 percent of the far larger chemical company it does not already
Wall Street had speculated on GAF possibly bidding for Union
Carbide since August, when the New Jersey-based maker of chemicals
and building materials disclosed it was purchasing Union Carbide
GAF currently owns 6.961 million shares of Union Carbide stock, or
about 10 percent, for which it paid about $304 million.
Union Carbide, which is undergoing an extensive financial
reorganization and is contending with the legal aftermath of a
chemical leak that killed about 2,000 people in India a year ago,
declined to comment on the offer.
Analysts said GAF's offer was generous and said Union Carbide's
legal difficulties might make it hard to fend off the bid by GAF,
which is less than a tenth the size of Union Carbide.
GAF's proposed acquisition would entail a tender offer of $68 per
share in cash for 48 million shares of Union Carbide stock, or about
80 percent of the shares. The proposal envisions that the cashtender
offer would be followed by a merger in which the remaining Union
Carbide shares outstanding would be converted into preferred stock
worth $68 per share.
A major bank would provide $1.5 billion in credit for the
acquisition and the remaining funds would be raised through the
issuance of debt securities to be handled by GAF's investment banker,
Drexel Burnham Lambert Inc.
Samuel J. Heyman, GAF chairman and chief executive officer, said a
""mutually satisfactory'' merger agreement would enable Drexel
Burnham to raise enough money so that GAF could pay cash for all
outstanding Union Carbide stock.
""... In the event that Union Carbide enters into a mutually
satisfactory merger agreement with our company prior to the
completion of the tender offer, GAF will pay the same $68 per share
in cash for the remaining shares in the merger,'' he said in a letter
to Warren M. Anderson, chairman and chief executive officer of Union
At Union Carbide's headquarters in Danbury, Conn., spokesman Tom
Failla said: ""We don't have a comment. We don't have any statements
to make at this time.''
On the New York Stock Exchange, Union Carbide stock closed at
$66.37 1/2 a sahre, up $3.37 1/2.
The company's stock price plummeted following the chemical plant
disaster last December in Bhopal, India. The company also faces
other lawsuits stemming from a toxic leak in August at its plant in
After plunging as low as $32.75 from $64 after the Bhopal
accident, Union Carbide stock had rebounded due to the takeover
Also aiding the stock price has been the company's reorganization
that included eliminating 4,100 jobs and writing off $1 billion in