United Technologies Corp. offered yesterday to negotiate a merger with Bendix Corp. as a way of ending the tangled, three-cornered takeover war among United, Bendix and Martin Marietta Corp.
The surprising offer by United Technologies Chairman Harry Gray would amount to a negotiated surrender for Bendix instead of the unconditional surrender demanded earlier by United and its ally, Martin Marietta, the Bethesda-based aerospace firm.
United would pay $85 a share for a majority of Bendix's stock, raising the ante in the complex struggle, and would take control of the Michigan-based company, with the terms to be negotiated.
Bendix officials had no comment, but there was no indication it was willing to give up its attempt to take over Martin Marietta and resist the counter moves by its two opponents. However, there will be growing pressure on the companies to sidestep a confrontation before they begin buying each other's stock at a cost of billions of dollars in cash and additional debt--a move that could seriously weaken both losers and winners, according to sources close to the companies.
If Bendix declines yesterday's offer, United Technologies will press ahead with its attempt to take over Bendix through a $75-a-share tender offer to Bendix stockholders.
Martin Marietta, which responded to Bendix's original takeover attempt by making its own offer for Bendix, said yesterday that Bendix stockholders who have pledged their stock to Martin for $75 a share should not reclaim their stock. If Bendix merges with United Technologies, Martin said, "arrangements will be made" for Bendix shareholders who pledged stock to Martin to get the $85 price offered yesterday by United.
Martin has received pledges for about 63 percent of Bendix stock, but it apparently cannot count on obtaining an actual majority when its tender offer expires Sept. 22. The shares offered so far include the biggest single block of Bendix stock, 23 percent of all the shares, which was tendered by Citibank, trustee of the Bendix employes stock option plan, but Citibank said yesterday it would withdraw those shares before the deadline in response to instructions from Bendix management.
After yesterday's skirmishes in a conflict that has stunned and fascinated the financial world, the position of the combatants was this:
Bendix's offer to purchase Martin Marietta for $48 a share remained in effect. About 58 percent of Martin's shares have been tendered to Bendix in response to the offer, and Bendix can begin buying them Friday morning.
Martin Marietta stock closed at $35.50 per share in yesterday's New York Stock Exchange trading, unchanged from Tuesday.
Martin Marietta's counterattack against Bendix, an offer to buy 11.9 million Bendix shares for $75 a share, also remained in place.
Martin can begin buying stock under that offer on Sept. 23, and could succeed in taking over Bendix before being taken over itself because of differences in the laws of the states where the two are incorporated.
Without the shares controlled by Citibank, however, Martin would not have a majority of Bendix.
Martin sued Citibank and Bendix in federal court in New York yesterday seeking to prevent Citibank from withdrawing the shares. Bendix stock closed at $59.50 yesterday, up $2.25.
United Technologies left its own $75-a-share offer for Bendix on the books, and increased the pressure on the Bendix management with its merger proposal.
That proposal was made with Martin Marietta's knowledge and approval, according to sources close to the company, and the agreement between United and Martin to carve up Bendix between them if either succeeds in its tender offer remains in effect, they said.
Under that agreement, if Bendix succeeds in taking over Martin, United will attempt to take over Bendix, and will then restore Martin's independence and sell it $600 million of Bendix assets.
Meanwhile yesterday, attorneys for Martin Marietta argued in federal court in Baltimore that Bendix's original tender offer violated federal securities laws because, they said, Bendix did not disclose its plans to divest itself of some Martin operations.
Marc Chernow, an attorney for Bendix, said Bendix never had any such plans.
In sworn depositions, he said, Bendix Chairman William Agee "testified unequivocally that there is no intention, plan, proposal or whatever you want to call it" to divest any Martin Marietta divisions. Judge Joseph Young said he would rule today on Martin's request that the Bendix offer be invalidated.
United Technologies' offer to work out a merger with Bendix was made in a letter to Agee from United Chairman Gray.
"We believe," Gray said, "that the present competing tender offers by Bendix and Martin Marietta create an intolerable situation for both companies, their shareholders and employes. Our offer is an alternative that will resolve the situation."
United, based in Hartford, Conn., builds a range of high-technology and construction products, including helicopters and jet engines.
Bendix is also a diversified manufacturer of auto parts, robots and other products.
Under yesterday's offer, United Technologies would buy 11.9 million shares of Bendix for $85 a share cash -- or $1.01 billion -- and acquire the rest by exchanging one share of United stock for each share of Bendix stock. United stock closed at $49.25 yesterday.
Gray said the offer "would allow Martin Marietta to remain an independent company.
"With the cooperation of all three companies, there would be no antitrust issues, and the merger of Bendix and United Technologies would be completed in a short period of time," he said.
The Justice Department has already given antitrust clearance to a Bendix takeover of Martin, but it is still reviewing the implications of a merger of Bendix and United, which compete in some areas.