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June 19, 2006 at 08:00 PM
NEW YORK (HedgeWorld.com)–The activist hedge fund Steel Partners II LP issued buyout offers this week to Bairnco Corp, and Stratos International Inc., which were met with mixed reactions.
Late Thursday [June 15] Steel Partners extended a bid to purchase Bairnco Corp. for $12 per share, an offer that values the company, which manufactures engineered materials and electronic components, at approximately $89 million. Steel Partners, which currently controls 15.5% of Bairnco’s equity, will begin a tender offer by the end of next week and the fund’s principals expressed their desire to meet with Bairnco’s board of directors as soon as possible.
“We have determined, after evaluating all our options, that commencing a tender offer would be in the best interest of all the shareholders,” said Warren Lichtenstein, managing member of the hedge fund, in a statement.
Bairnco management isn’t so sure. The Lake Mary, Fla.-based company responded Friday [June 16] with a statement cautioning shareholders against “taking premature action” in response to the announcement from Steel Partners.
The markets reacted more positively to the unsolicited bid. As of midday Friday, shares in Bainco (BZ) had risen to $11.49, a gain of $1.53 from its close at $9.96 the previous day.
Steel Partners found a warmer, if not quite open-armed, reception earlier in the week at Stratos International Inc., a Chicago-based developer and manufacturer of components and products used in telecom, video and other markets. The hedge fund, which owns approximately 15% of the company’s outstanding common shares, advanced an unsolicited offer June 9 to acquire Stratos for $7.50 per share.
In response, Stratos issued a statement acknowledging that it has been in discussions with Steel Partners “over a period of several months,” a span of time in which the company was careful to point out that its stock price had traded well over the $7.50 mark, as high as $8.11. The company didn’t discount the possibility of a sale to Steel Partners, but said that the hedge fund would need to fully spell out its intentions before any decision could be made–something Steel Partners apparently hasn’t yet done in the ongoing discussions.
