The world's second largest whiskey producer, Hiram Walker-Gooderham and Worts Ltd., is about to be swallowed in one of the largest corporate takeovers in Canadian history.
Consumers' Gas Co. of Toronto announced a $1.3 billion share exchange offer for Walker, an international distiller based at Walkerville, Ontario, near Detroit.
The combined companies will form the fifth largest company in Canada in terms of profit.
Consumers' recently amalgamated with Home Oil Ltd. and Zygnus Corp. Ltd. both of Calgary, to gain a major direct stake in the western oil and gas business. Consumers, formed in 1848, is a distributor of natural gas in Ontario, Quebec and parts of northern New York state.
The overall value of the merger ranks with the 1978 takeover of Pacific Petroleums Ltd. by Petrol-Canada, the government oil company. Both are valued at about $1.3 billion but the Pacific pete deal was for cash. b
The merged company will be international in scope but predominantly Canadian-owned. About 20 percent of Walker's shares are in U.S. hands while not more than 5 percent of Consumers' shares are held abroad.
Total assets following the merger will be about $3.1 billion of which $1.8 billion is represented by Consumers'. It is offering 1.375 of its shares for each Walker share. Trading in both companies was halted today on the Toronto stock exchange pending dissemination of the merger agreement. The last trade in Walker was at $29, indicating a value of $37 1/8 in Consumers' stock for each Walker share.
The largest shareholder in Walker is HCI Holding Ltd. of Toronto with a 5.8 percent interest acquired late last year. HCI had partners in the acquisition including Bel-FRAN Investments Ltd. controlled by the Belzberg family of Vancouver.
The Belzbergs made headlines last year when they acquired more than 5 percent of Bache Group Incorporated, the big U.S.-based stockbroker.
Andrew sarlos, HCI president, told The Post it is a "very very fair offer." The profit to MCI, based on current market prices, is about $10 million.
Walker is a worldwide distiller and distributor of alcoholic beverages. Its major brands include Canadian Club, Imperial, Ballantine's Scotch, Crystal Vodka, various Hiram Walker liqueurs plus Drambuie, Kahlua, and Cointreau liquers and Courvoisier cognac.
H. Clifford Hatch, Walker chairman, said the company has no plans for producing gasohol.
"That's industrial alcohol. We're in the branded business," he said. Hatch noted that to produce gasohol requires absolute alcohol, from which all water has been removed. He said Walker's excess capacity in the United States has been operated with the output going to a middleman who further processes the output to produce absolute alcohol. "It's just not for us," he said.
In its latest year ended Aug. 31, Walker's profit was $96.9 million, or $5.63 a share. This week it reported a 19 percent increase in first quarter earnings. The company reports in U.S. funds.
Consumers' was formed in 1848 to provide gas for Toronto street lighting. Its profit in the latest year ended Sept. 30 was about $53 million, or $2.42 a share, up from $50.6 million, or $2.29, a year earlier. Revenue was $820.4 million, up from $743.3 million.
The world's largest distiller is Seagram Co. Ltd. of Montreal. It holds substantial oil and gas interests in the United States.
The Walker-Consumers' merger will put the No. 2 distiller ahead of Seagram -- at least in oil and gas.