Mohasco Corp., a Fairfax-based manufacturer and marketer of home furnishings, has approved a series of measures designed to make it less attractive to hostile bidders.
The provisions, announced yesterday by Mohasco executives, are designed to block a possible takeover attempt by Nortek Inc. of Providence, R.I., a building, aerospace and electrical components company.
Nortek, which last week announced that it had acquired 7 percent of the furniture company's outstanding stock and was considering a merger proposal, reiterated in a letter this week to Mohasco Chairman Herbert J. Broner its desire for "a combination of the two companies" that "would be mutually advantageous."
"We feel that if we have an opportunity to sit down with them and discuss the possibility of an acquisition, and establish what we consider to be a fair price, then their antitakeover measures would not be necessary," a Nortek spokesman said yesterday.
The spokesman said Broner has not answered the letter sent by Nortek Chairman Ralph R. Papitto.
Mohasco's board, however, has sent an answer of sorts, and it appears to be "no."
The antitakeover measures approved by the board include: Reinstituting a provision used by Mohasco in 1985 to successfully fend off a hostile takeover attempt by Columbia Enterprises Inc., a Miami-based investor group. In the event of a merger or the outside acquisition of 10 percent of the company, current holders would receive preference shares in the surviving company.
Formulating a new "poison pill," also designed to thwart what Mohasco's management views as "unfair accumulations of the company's stock on the open market." Under this provision, the board could undertake actions to dilute the value of the remaining stock in the event that an unfriendly buyer acquired between 10 and 50 percent of the company.
Exploring other alternatives to "maximize stockholder value," and coincidentally reduce the value to an unwanted buyer. The alternatives would include increasing the price of the company's stock by seeking a friendly buyer and selling valuable Mohasco parts, such as the company's Mohawk Carpet manufacturing and Cort Furniture Rental operations.
In related developments, Mohasco yesterday announced 1987 earnings of $12.7 million (90 cents a share) on sales of $806.9 million, compared with income of $15.8 million ($1.11) on sales of $757.7 million in 1986.
Mohasco's 1987 annual income was affected by a charge of $13.5 million (98 cents) to cover the costs of selling its Mexican carpet manufacturing operations.
Fourth-quarter profits for Mohasco were $8.7 million (62 cents) on sales of $214.4 million, compared with $8 million in income (55 cents) on sales of $208.7 million in the 1986 period.