It's not easy to place Jon M. Huntsman, one of Utah's most successful - and wealthiest - entrepreneurs in the role of an underdog, but when his adversary is among Japan's largest global conglomerates the David vs. Goliath image isn't so hard to swallow.
Are you ready for Jon vs. Mitsubishi?That's the way it's shaping up in the battle for Aristech Chemical Corp., a polypropylene manufacturer based in Pittsburgh, Pa., that Huntsman wants very much to add to Huntsman Chemical Corp.'s group of chemicals/plastics companies.
So far, though, Goliath . . . make that Mitsubishi . . . is winning what at this point in 1990 is among the country's larger and more interesting takeover wars and one that, if Mitsubishi wins out, would represent one of the largest Japanese investments ever in an American company.
The latest blow to David's . . . make that Jon's . . . fortunes came Wednesday when Aristech's directors accepted an increased offer of $27 a share (about $877 million) from Mitsubishi and Aristech's senior management, a move that many watching this epic struggle might see as a mortal blow to Huntsman's bid.
But maybe not. True, things do not look good for the underdog, but Huntsman is not giving up just yet. "We're taking a long, hard look" at Mitsubishi's latest thrust, said Huntsman. "It's under consideration (and) we're not out of the fray."
Huntsman, who is Aristech's largest single shareholder with 2.81 million shares (about 9 percent of the stock), first proposed to acquire the company last fall in a $25 per share deal that was rejected by Aristech Chairman Tom Marshall as unsolicited and conditional, not to mention inadequate.
Then, on Jan. 17, Marshall and three other senior managers at Aristech joined with Mitsubishi to bid $26 per share. That extra dollar might not seem like much but it was deemed adequate by Aristech's directors. If some press reports suggested that the small management team would be in for a generous bonus for their support of Mitsubishi, well you know how journalists are.
At that point, Huntsman went looking for a little outside muscle himself and he found it in one of the big kids on the U.S. block: General Electric Corp. In a joint venture offering, Huntsman and G.E. Plastics suggested that, upon completion of its research of Aristech's facilities and operations - known as "due diligence" - it would up the ante to $27 per share.
Huntsman than asked for a two week extension of the Jan. 29 deadline for bids set by Aristech - a not unreasonable request considering that Mitsubishi had three months to look things over.
But Marshall and company said no on Monday and on Wednesday said they would match Huntsman's $27 conditional offer. Has Mitsubishi triumphed? It's too soon to say. Aristech said in a statement Wednesday that its agreement with the Mitsubishi group would allow it to continue considering offers from other groups, including Huntsman.
Aristech said the Mitsubishi group would promptly begin a tender offer for all outstanding shares of the company. At the same time, Aristech said it would allow Huntsman to review its finances under a confidentiality agreement.
Under the terms of the takeover agreement, top management, led by Marshall, would acquire an initial stake of 12.5 percent in a new holding company of which Aristech would be a subsidiary. Over the next five years, management would get another 20 percent of the company's equity.
Outside the board room, the rooting seems to be for the "little guy," with most of Aristech's 1,800 employees hoping they come under the Huntsman, not the Mitsubishi, umbrella. One plant near Pittsburgh is said to have voted 130 to none in favor of a Huntsman takeover.
The reason? Huntsman is generally regarded as a generous employer who provides his people a host of benefits and highly competitive salaries. (His lavish Christmas gifts to all his employees haven't hurt that reputation a bit.)
Marshall, on the other hand, comes out of the tight-fisted forge of USX Corp. (formerly U.S. Steel) which spun off Aristech in 1986. Nevertheless, he is generally credited with turning the company around, slashing its debt, overhauling its operations and tripling its earnings. Last year, however, the company's performance began to slip.
Will Huntsman eventually prevail? Maybe not, but either way the Utahn will likely come out of the battle unscathed. Either he becomes the new owner of Aristech Chemical Corp. or the value of his shares increase by a factor of millions.