HERE’S a complete list of companies that are guaranteed to be shopping for acquisitions in this miserable economy:
1.) L-3 Communications Holdings Inc.
2.) No one else.
Yep, there’s only one company on the list.
And it is an outfit that was founded only a couple years ago almost as an afterthought. A few weeks ago L-3 (which stands for Lehman Brothers, Frank Lanza and Bob LaPenta, the two founding executives) sold stock to the public in a secondary offering that raised nearly $500 million.
There are, of course, major corporations that have people who do nothing but search for acquisitions, so my list is not comprehensive. But L-3 has garnered a reputation on Wall Street as one of the hungriest companies around.
L-3 came into being in 1997 when it bought pieces of Loral Corp. It has since acquired more than a dozen small businesses in the last two years, mostly subsidies or privately held companies in the defense electronics and communications industry. Some of that money raised will likely be used to pay down the company’s debt, which has been rising with the firm’s rapid expansion through the acquisitions it’s made.
But with the large amount of borrowing still available to L-3, people on Wall Street are speculating that the next deal the company does will be for billions of dollars.
But what will the company buy? It isn’t divulging that. But Lanza does predict mergers among mid-tier companies such as his own.
“There are going to be mergers,” he says, “and I think L-3 will be one of the survivors.”
Wall Street analysts have their lists of candidates, and I have one. And with so little activity taking place right now in the mergers-and-acquisition industry, L-3 is getting more attention than it normally would attract.
“They are going to make a big acquisition,” said a speculator who has been following this stock quite closely.
Sam Pearlstein, an analyst at First Union Securities, says the company is continuing to be mum about its plans. But management “is talking about doing bigger acquisitions than they have in the past.”
Analyst Byron Callan of Merrill Lynch, says L-3 is talking “double-the-size-of-the-company-type deals.” He adds that “Lapenta’s got a credenza with a stock of [deal] stuff on it.”
So, what’s on the credenza?
I wasn’t given a peek. But a source of mine thinks that Harris Corp, which is an international communications equipment maker, would be a very nice fit indeed for L-3.
Harris’ stock is up from $24 to nearly $30 a share over the last month, mainly because the company has been talking up its earnings prospects.
But, also bolstering the stock, sources tell me, is the idea that L-3 is cur- rently stalking Harris.
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“The [Carter-Wallace] board should resign immediately and let someone else sell this company,” said Mario Gabelli when I managed to reach him after the drug company had agreed to be acquired in two parts for only $20.30 a share.
OK, calm down, Mario!
Are you or aren’t you going to hire an investment banker and try – as you’ve already threatened – to find a better deal for Carter-Wallace?
“Listen, I’m from The Bronx. And I’m a Yogi Berra fan. And, as Yogi said, ‘It ain’t over till it’s over,'” Gabelli answered.
Gabelli’s pique is understandable, since he is the largest shareholder in Carter-Wallace and the company’s stock did peak at $34 a share. Even before the deal was announced on Tuesday, Carter-Wallace’s stock was selling at over $22 a share.
It quickly retreated from that point on the announcement that a group led by Church & Dwight, which makes Arm & Hammer baking soda, would buy Carter-Wallace’s consumer operation and that MedPointe Capital Partners would buy the health care business.
Yogi quotes aside, I asked Gabelli if he really planned to continue looking for a buyer on his own.
“If there is no big lockup [agreement] or drop-dead fees, it is very clear there is too much money left on the table.”
Uh-hum. For those of you who’ve been following this takeover since I broke the news last May that this company was up for sale, I translate Gabelli’s comments to mean he’ll continue to press for a better solution – including a self-tender offer – until the bitter end if the situation isn’t legally impossible. The two deals are targeted to be completed in September, so this’ll be over soon.
* Please send e-mail to:
jcrudele@nypost.com