Easco Corp.'s board of directors has recommended that the company's stockholders reject a tender offer for Easco's shares made by a company controlled by Equity Group Holdings.
Easco also said in a statement that the company is seeking other purchasers for the firm, a Baltimore-based manufacturer of hand tools and aluminum products. The company added that it has been unsuccessfully trying to sell its hand tools business which has been losing money. Easco executives could not be reached yesterday for comment.
The same written statement announced that the company's annual meeting will be held Aug. 27. According to an attorney for Equity Group Holdings, Easco directors amended the company's bylaws to allow it to postpone the annual meeting for more than three months.
Equity Group, a Washington investment firm, has been aggressively trying for months to take over Easco. About three weeks ago, a company controlled by Equity Group made a cash tender offer for 3.2 million shares of common stock of Easco at $20.50 per share.
The tender offer was made by ES Acquisition Corp., formed as a unit of Equity Group and Clarendon Insurance Co. (Bermuda) Ltd. Steven Rales, a general partner of Equity, said that "the purpose of the offer is to acquire enough shares which, when added to the shares currently owned by Equity Group and Clarendon, will constitute a majority equity interest in Easco Corp.
Equity Group, whose sole partners are Rales and his brother, Mitchell, has a 17.7 percent interest in the firm, while Clarendon has about a 4.3 interest.
Easco's board of directors recommended that its shareholders reject the ES offer because it is limited to 3.2 million shares and is subject to "significant conditions," including the availability of financing.
The board also said that Equity Group has only a "present intention to propose" a merger to acquire the company's remaining shares and that there are "substantial contingencies" as to whether or on what terms the merger would be consummated.
Easco said the company has been discusssing financial alternatives to the tender offer which would maximize value for its stockholders with a number of industrial companies and financial institutions. Easco said that no satisfactory proposal has been made to acquire the entire company.
Richard P. Sullivan, Easco's chairman, said the Equity Group offer raises legal questions.