The president of Martin Marietta Corp. said yesterday the company probably will sell some operations to help reduce the $900 million debt it incurred fighting the takeover advances of Bendix Corp.
But the executive, Thomas G. Pownall, said it was "certainly possible" that Marietta also might make an acquisition using the large amount of its stock returned to Marietta as part of the settlement of the merger battle. He would not be more specific.
Martin Marietta stock tumbled yesterday by $8.25 to $35.25, the first day it has traded since last Wednesday. Bendix rocketed $17.12 a share to $74.62. Under the settlement terms, Allied Corp. will pay $85 a share for Bendix stock.
In a news conference at Marietta's Bethesda headquarters, Pownall said, "We will have to find some mechanism, in all probability, to divest ourselves, perhaps, of some of our assets. . . . There is little question in my mind but that we will entertain some opportunity to do that." Pownall would not be specific about what operations might be sold.
Martin Marietta is primarily an aerospace contractor, but it also has interests in aluminum, chemicals, cement and sand and gravel.
Analysts have speculated that the latter divisions might be put on the block.
The Bendix-Martin Marietta battle ended last week with Allied taking over Bendix and Marietta regaining its independence. Bendix had owned a 70 percent stake in Marietta, and Marietta had bought more than half of Bendix in the battle, which Bendix started.
Under the settlement, Martin Marietta traded its Bendix holdings to Allied for part of Bendix's Marietta stock. That left Allied with 39 percent of Marietta. Marietta is left with $900 million in debt incurred to buy the Bendix stock, and it has fewer shares outstanding now. Analysts say it could be years before Marietta repairs the damage to its balance sheet.
Pownall said the settlement "was an alternative better than some others." But he admitted that the month-long battle was a trying experience.
"We did not enter this for the opportunity to spend $900 million to remain independent. We obviously are less well off than we were 33 days ago.
"We do have a somewhat less attractive balance sheet and a great deal of increased debt," Pownall conceded. "We do believe we can manage that debt and bring it down to the point where it is very livable."
Martin Marietta could reduce the debt in several ways, including reissuing the stock that was returned to it or selling assets. It might also trade the stock for an interest in another company, which could improve its balance sheet.
Analysts say the company's financial problems will keep its stock price low for several months, but Pownall said, "The $35-a-share stock price today is a temporary circumstance, and in some years to come it will become a very improved stock."
Pownall gave his company's side of the takeover battle in some detail, and while he said "we never were angry with anyone," he stopped himself several times in mid-sentence to tone down remarks about Bendix Chairman William Agee.
He also reiterated the company's position that Bendix management was ill-suited to run Marietta's aerospace business. "This is a very sophisticated, dedicated, hard-to-understand-from-the-outside sort of business, and I don't believe they could manage it," he said. "I don't think they have the foggiest notion -- no, I take that back -- they probably do have a foggy notion, but I don't think they have a sense to run a business like this well."
Pownall confirmed Agee's disclosure that Marietta had turned down a last-minute offer from Bendix to purchase for $55 each the Marietta shares Bendix had not bought under its $48-a-share offer. He said the offer was in securities, rather than cash, and the $55 price was questionable based on the valuation of the securities.
But the real problem in capitulating to Bendix, he said, was Marietta's board felt that once it had made its offer to buy Bendix stock, it had an obligation to Bendix shareholders to go through with the offer -- even though Agee offered to indemnify the Marietta board against any resulting lawsuits.
Pownall said the company is satisfied with its pact with Allied, under which Allied agreed not to exploit its holding in Marietta for the next 10 years and to vote the huge block of stock as directed by the Marietta board.
Pownall would not rule out a possible merger with Allied in the future, if Marietta's financial situation became untenable, but he said Marietta had no desire to merge with Allied at this time.
In a related development yesterday, the last loose end in the battle was tied up when United Technologies Corp. said it would drop its offer for Bendix. UTC had made the offer earlier this month at the request of Marietta.