Jorge E. Carnicero, chairman of DynCorp, won the takeover battle for the McLean government-contracting company by patiently pursuing a savvy strategy of waiting after his first bid for the company was rejected by the board, according to analysts.
A special committee of the DynCorp board last week recommended that the company accept a takeover offer from Carnicero and Synergy Group Holdings, a subsidiary of a privately held propane distributor, nearly three months after Carnicero's first bid for the company was rejected.
Carnicero's first bid -- made Oct. 8, 11 days before the stock market crash -- was worth about $270 million, or $25 a share. Analysts say Carnicero and Synergy will now be buying the company for about $251 million -- $23.25 a share -- in a complex cash and securities package.
"Carnicero has played it pretty sharp," said Charles Frumberg, an analyst with Mabon Nugent in New York. "The market crashes and he sits back and doesn't do anything. Another offer comes in and runs through its various permutations and it falls apart and he steps in at a much lower price."
The stunning turnaround for Carnicero came on the heels of a failed offer from another group of DynCorp executives, led by DynCorp President Dan R. Bannister. That offer, which went through several versions, ultimately fell through because of problems obtaining insurance and with setting up an employe stock ownership plan central to the offer. "Bannister couldn't make it fly," said a source close to the company.
Bannister, who was on vacation last week, could not be reached for comment.
Carnicero's first offer was rejected in October because the board thought the company was worth more, sources said. Carnicero said the rejection "disappointed" him.
A source said, "Jorge is chairman of the company. ... He comes in one day and says, 'This is my price,' and the board says no. That created a contentious relationship. ... I believe he felt his loyalty was compromised."
But as the Bannister deal collapsed, Carnicero was able to step back in with a much lower offer because of new market conditions caused by the Oct. 19 stock market collapse, which battered DynCorp's stock.
"The whole world turned upside down from the day the chairman made the offer and the board turned it down," one source said.
But the source said the board also wasn't entirely pleased with the Bannister bid, which included the sale of some DynCorp assets, as well as bank loans and high-yield securities.
Carnicero said he and other board members "tried very hard" to put the Bannister deal together, but "there were some problems that couldn't be overcome."
The chance to buy the company in the end for much less than Carnicero originally offered had to do with economic and market conditions rather than a concerted strategy. "There was an act of God -- Black Monday," he said.
Carnicero denied that there is any bad blood between himself and members of the board and said he plans no management changes -- including Bannister -- after the deal is concluded.
"My management is very important to me. There is no problem and we are not in a competition," he said. "We all have at heart our own company."