The board of directors of Textron Inc. today unanimously rejected the surprise offer by Chicago Pacific Corp. to purchase Textron for $43 a share, citing what it called the inadequacy of the offer and several other factors.
Textron said it will not hold further discussions with Chicago Pacific. Since Textron's directors rejected the offer, Chicago Pacific has agreed not to pursue its interest in Textron, Textron said.
Over the weekend, Chicago Pacific agreed not to purchase Textron stock in the next two years without the consent of Textron's directors. When Chicago Pacific's bid to acquire Textron for almost $1.6 billion was revealed last week, it appeared the company might attempt an unfriendly takeover through a tender offer if a friendly merger could not be achieved.
Textron said its directors considered the opinion of its financial adviser, Morgan Stanley & Co., Inc., that the $43 a share offer is inadequate. Other factors that influenced the directors were Chicago Pacific's failure to demonstrate its ability to finance the acquisition, and the high leverage that would result from the use of debt in the proposed takeover, Textron said.
Chicago Pacific said it had received reasonable assurance from Citicorp that the financing for the transaction is available. It said the financing arrangements had never been reviewed by Textron or its financial advisers.
Chicago Pacific said Textron had not made available confidential information that might have allowed Chicago Pacific to improve its offer.
The statement said Chicago Pacific had no intention of purchasing additional shares of Textron without that company's consent.
Textron stock soared from the mid-30s to as high as 43 last week when the offer was announced. Textron fell 1 3/8 yesterday to 36 1/2.
Textron became one of the nation's first conglomerates under its founder and former chairman, Royal Little, and subsequently under William G. Miller, a former Treasury secretary and Federal Reserve Board chairman. The company had almost $3 billion in revenue last year.
Textron's operations include Bell Helicopter, Speidel watchbands, Homelite power equipment and Jacobsen lawn, snow and garden equipment.
Chicago Pacific is the successor to the Chicago, Rock Island and Pacific Railroad Co.