GAF Corp. said yesterday it would sell some of Union Carbide Corp.'s most profitable operations, including the company's consumer products division, if it obtains control of the firm as a result of its $4.1 billion takeover bid.
In documents filed late yesterday at the Securities and Exchange Commission, GAF acknowledged that it has not yet lined up enough credit commitments to finance its bid. But the New Jersey-based speciality chemicals firm contended it would be able to pay for its takeover by spinning off enough Carbide assets over the next two years to raise between $3.7 billion and $4.5 billion.
Carbide again refused to comment on the takeover threat yesterday, but Wall Street was filled with speculation on defensive tactics that the company, which is based in Danbury, Conn., might adopt. One popular theory was that Carbide is planning a "PAC-Man" defense, in which it would turn and gobble up the much smaller GAF.
GAF stock rose another $2.50 yesterday, closing at $60.125. The increase in GAF's stock price, which followed an even more dramatic $10 jump on Monday, defied the conventional pattern in Wall Street takeover battles in which the acquiring company's stock usually falls and appeared to support the idea that it would become a target for a PAC-Man raid by Carbide.
The price of Carbide's stock, meanwhile, dropped $2 to close at $64.375.
The GAF documents filed with the SEC underscore what Wall Street analysts have described as the enormous risks associated with an attempt to acquire a company more than 10 times its size. When GAF launched its takeover bid on Monday, the firm said it was counting on $1.5 billion in bank loans and another $3.2 billion to be raised by the sale of high-yield, unrated securities, or "junk bonds," to be arranged by its financial adviser, Drexel Burnham Lambert.
But GAF said in the documents that it has received a commitment for only $150 million in loans from a major New York commercial bank. The bank, which it did not identify, "will use its best efforts" to organize a syndicate of other banks and financial institutions to provide the rest of the $1.35 billion in loans.
In its only reference to Carbide's huge potential liabilities stemming from last year's Bhopal poison gas disaster, GAF said the bank loans would not be conditioned on the pending litigation over the accident. Carbide is facing claims for billions of dollars in damages as a result of Bhopal, and GAF would inherit those liabilities if it obtained control of the company.
GAF also said that it would sell some of Carbide's most prized assets, including its consumer-products segment, which makes such well-known household products as Eveready batteries, Prestone antifreeze and Glad bags.