Norton Simon Inc., the widely diversified conglomerate whose interests include Avis rental cars, Max Factor cosmetics and Hunt-Wesson foods, said yesterday it had received an offer from a group led by its chairman, David Mahoney, that would turn the corporation into a private company.
If the bid is successful, Norton Simon--which had sales in the fiscal year ended last June 30 of $3 billion--would apparently be the largest company ever to go from the ranks of the New York Stock Exchange to private ownership.
Norton Simon said its board was considering the offer, which one analyst estimated was worth more than $700 million. But Stanley Fishman, an analyst at Fahnestock & Co., suggested that the board had already given its informal blessing to the deal. "I'm sure they felt out the board members before going ahead," he said.
Norton Simon's shareholders would also have to approve the deal.
But more than one analyst suggested that the price being offered for the company might be too low, and others speculated that Norton Simon may have announced the offer to flush out a takeover offer from another company.
Mahoney, who has become a familiar face to television viewers as the spokesman for Avis Rent-a-Car, could not be reached for comment, and company officials would not comment beyond a statement outlining the offer.
Analysts said the announcement did not come as a complete surprise: Norton Simon has been aggressively purchasing its own shares over the past year or so, a strategy that can be an aid to converting a publicly held company into a privately owned one.
If Norton Simon is "taken private," the deal would be done through a transaction known as a leveraged buyout, in which the company's assets presumably would be used as collateral for bank loans that would be used to buy out the company's current shareholders.
The Mahoney group, which includes other members of management, said it tentatively had lined up $1.65 billion in financing from two unnamed banks and Drexel Burnham Lambert, the brokerage house. The money would be used to purchase the company's stock, paying off most of Norton Simon's existing debt, and for working capital.
Under the terms of the proposed transaction, Norton Simon shareholders would receive $21 for each share of the company's common stock, plus .08 of a share of a new issue of preferred stock for each common share. Currently outstanding convertible preferred shares would be converted into common stock and bought, and other current preferred stock would be exchanged for the new preferred shares.
One analyst estimated that the package would be worth about $31 per common share. In NYSE trading yesterday, Norton Simon closed at $30.50, up $4.12.
But this analyst, who asked not to be named, said the company's assets were worth as much as $50 a share.
Another analyst, Dean Witter Reynolds Inc.'s Lawrence Adelman, also raised questions about the offering price. "The question is, are these terms attractive enough to get all of the stock?" he said. "That's going to be the really interesting question--whether the stockholders will find this attractive enough to tender their shares." Adelman speculated that the Mahoney group might reveal an additional part of the offer in the next few days.
Norton Simon, one of the classic conglomerates, was assembled by Mahoney and the company's founder, Norton W. Simon, over more than three decades of acquisition and pruning, and has at various times also included McCall's magazine and Canada Dry soft drinks.