Owens-Corning Spurns Wickes Bid : Calls Offer Inadequate; Filing Says It Has Other Suitors

The board of Owens-Corning Fiberglas on Friday unanimously rejected as inadequate a $74-a-share takeover bid by Wickes Cos. and urged management to continue to explore alternatives.

At the same time, the company revealed in a filing with the Securities and Exchange Commission that it has had “indications of interest” from other potential buyers, but it would not identify them.

The Toledo, Ohio, building products maker has been cool since Wickes first expressed interest on Aug. 5. It said Friday that the bid fails to fully reflect the company’s “inherent values” and is not in the best interest of stockholders.

As a result, the board said it is considering a leveraged buyout, a merger with another company or a recapitalization, which presumably would involve an exchange of bonds for stock or of preferred stock for common stock.

Santa Monica-based Wickes issued a two-sentence response to Owens-Corning’s rejection of the bid, valued at about $2 billion: “Although Owens-Corning Fiberglas’ board has rejected our offer, it hasn’t proposed any alternative. Until the board does, there’s really no basis for us to comment.”

Owens-Corning is the world’s largest manufacturer of glass fiber materials and is a major producer of polyester resins and high-performance composite materials used in construction, autos and boats. Its two principal products--roofing and insulation--suffer from overcapacity and the highly cyclical nature of the building industry.

As far as Owens-Corning’s ability to attract a higher bid from a “white knight,” analyst Daniel D. Bayston at Duff & Phelps in Chicago said, “I would think it would be difficult for Owens-Corning to find a ‘white knight’ due to the commodity nature of their business and the low growth prospects for their primary products.”

Both Aluminum Corp. of America and Du Pont Co.--two companies rumored recently to be willing to rescue Owens-Corning--have denied interest in making bids.

Meanwhile, some of Wickes’ competitors have reacted strongly to the idea of its acquiring Owens-Corning.

“I’m very disheartened to see a competitor buying a supplier,” said Joe Hardy, founder and president of 84 Lumber Co., a nationwide chain of 400 stores with headquarters near Pittsburgh. “If (Owens-Corning) doesn’t stay independent, I’m going to go elsewhere” for supplies.

Hardy said he recently sent a telegram to Owens-Corning Chairman William W. Boeschenstein offering to become an equity partner to help the company avoid a takeover. In a telephone interview, he added that he bought a 5% stake in National Gypsum earlier this year to help the company fend off a Wickes takeover effort.

In rejecting Wickes’ bid at a meeting Thursday, the Owens-Corning board said it took into account a number of factors, including the company’s financial condition and prospects, current market conditions and the advice of the company’s financial advisers, Goldman, Sachs & Co., that the price wasn’t good enough.

“We think the Wickes proposal fails to recognize the full value of Owens-Corning today,” Boeschenstein said in a statement. “Based on the potential benefits we believe can be realized through a substantial restructuring of Owens-Corning’s business implemented by our management, we believe we can achieve more value for stockholders.”

Wickes, which is primarily involved in lumber, building supplies, home improvement centers and furniture, controls 8.5% of Owens-Corning’s 29.8 million outstanding shares. A tender offer for the remaining 91.5% began Aug. 12 and expires at midnight EDT on Sept. 10.

In trading Friday on the New York Stock Exchange, Owens-Corning shares closed up 50 cents at $81.75; Wickes, traded on the American Stock Exchange, was unchanged at $5.