United Technologies Corp. joined forces with the Martin Marietta Corp. today in a move to conquer and divide the Bendix Corp. before Bendix can carry out its attempted takeover of Martin Marietta.
Bendix immediately countered by increasing its original offer to buy control of Martin Marietta, the Bethesda-based aerospace firm, raising the stakes and the complexity of the bruising merger battle.
After a weekend of secret planning, Martin Marietta and United Technologies disclosed today their joint strategy -- to block Bendix by acquiring it and breaking it up.
United announced an $892.5 million cash bid for 11.9 million shares -- 50.3 percent -- of Bendix at $75 a share, saying it proposed to sell some of Bendix's high-technology operations and other assets to Martin Marietta for $600 million. If United's cash offer succeeds, it would then exchange United stock for the remaining Bendix stock on a share-for-share basis.
Hours after United, the Hartford, Conn., aerospace and electronics company, announced its bid, Bendix retaliated by raising its offer for Martin Marietta to $48 a share from $43. The total cost of the offer would rise to $1.7 billion.
Martin Marietta's board of directors unanimously rejected that offer tonight and reiterated the company's determination to either take control of Bendix or buy pieces of it from United.
Harry J. Gray, United's chairman, said his firm's offer followed talks with Martin Marietta, and is designed to resolve "an obviously difficult situation." The proposal, he said in a statement, would "enable UTC to further broaden its participation in the automotive, electronics and industrial markets."
Similarly, Martin Marietta President Thomas Pownall said the acquisition from United of the Bendix assets would be in the interests of Martin Marietta's shareholders and would "complement" the company's aerospace and technology ventures.
Bendix Chairman William Agee, while saying his Southfield, Mich., company was still reviewing the United offer, appeared to reject it, calling it "even less than that proposed by Martin Marietta, which our board...determined was grossly inadequate."
Agee's remarks were contained in a letter to Pownall. Agee also proposed that he and Pownall "meet promptly" to discuss the proposal "in a spirit of understanding."
Pownall, however, in a letter to Agee rejecting Bendix's latest offer, said he could "find no useful purpose to be served" in scheduling such a parley.
The tussle began two weeks ago when Bendix made a surprise bid for Martin Marietta. Last week, Martin Marietta firmly rejected the offer and turned the tables by offering to buy Bendix for $75 a share.
Only Monday Bendix announced what had appeared to be a step toward winning the struggle, when it said that 58 percent of the outstanding shares of Martin Marietta stock had been tendered under the terms of its offer through the weekend. Agee called that "a clear referendum," although the shares can be withdrawn until Sept. 16.
Martin Marietta's counter-strategy depends on United winning control of Bendix before Bendix can complete its takeover. If it works, United would return the shares tendered to Bendix by Martin Marietta's shareholders, sources said.
In his letter to Pownall, however, Agee contended that the plan was "unrealistic," adding, "I trust that your board is not relying on this sentiment."
Bendix stockholders have until midnight Thursday to tender their shares under the terms of Martin Marietta's $75 offer. Bendix shareholders have until Sept. 28 to tender their shares to United, whose offer will expire a week later.
United's emergence into the picture muddies an already complicated situation for Wall Street analysts and traders.
"The whole thing is very confusing," said Alan Benasuli, who watches United for Drexel Burnham Lambert Inc. "We already had two confusing situations and now we have a third. It is obvious that Martin Marietta is trying to remain independent, but if I was Bendix, I would still buy as much Martin Marietta stock as I could."
Analysts generally said the move made enormous sense for United, although a number expresssed surprise that the acquisition-minded company would get entangled in the hard-fought Bendix-Martin Marietta affair.
Ultimately, if all goes according to United's plan, the deal would only cost United about $300 million in cash. "It makes ultimate sense because United is a bit short of cash," commented Eliot Fried, an analyst with Shearson/American Express.
Sources said that officials of Martin Marietta's investment banking company, Kidder, Peabody, contacted United on Aug. 31 about the possibility of United buying pieces of Bendix if it was taken over by Martin Marietta.
Those talks progressed within two days to a point where the top officers of both companies worked out the general outline of the deal, which then was approved by both boards of directors.
The agreement between United and Martin Marietta provides that the Bethesda-based firm will, "as soon as practicable," purchase "certain aerospace-electronics operations of Bendix and any other Bendix operations UTC desires to dispose of in order" to speed review of the merger by federal antitrust officials.
United and Martin Marietta also announced that they were opposing amendments to the Bendix charter that are intended to block Martin Marietta's effort to gain control. United filed an action in U.S. District Court for Maryland claiming that the Bendix amendments violate securities statutes.