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Greenway Wins Outboard Marine Battle
07:32 a.m. Sep 14, 1997 Eastern
By David Lawder
DETROIT (Reuter) - Greenway Partners has emerged victorious in its bid for Outboard Marine Corp., saying its $364 million cash tender offer put 91 percent of the boat and marine engine maker's stock under its control.
The disclosure Friday forced rival bidder Detroit Diesel Corp. to end its $323 million cash and stock tender offer, which had been extended until Monday.
Greenway's Greenmarine Acquisition Corp. affiliate said it will seek to complete the merger under Delaware law as soon as possible, enabling it to acquire the remaining 9 percent of Outboard Marine.
The deal puts the Waukegan, Ill.-based maker of outboard motors and recreational boats into the hands of one of its largest shareholders, a New York-based investment group not known for operating manufacturing companies.
Detroit Diesel, the truck and marine engine maker controlled by transportation mogul Roger Penske, announced a $16-a-share cash and stock merger with Outboard Marine in July and said it hoped to combine the companies and make them more efficient.
But Greenway, which had amassed a 9.9 percent stake in Outboard Marine at the time of Detroit Diesel's offer, was said to be angry with a low-ball bid that some Wall Street analysts described as a ``take-under.''
In August, the Greenway-led Greenmarine group announced its own $18-a-share cash tender offer for Outboard Marine, causing many holders to shift their shares from Detroit Diesel to the higher bid.
Detroit Diesel kept extending its tender offer but did not raise the price.
``This outcome is disappointing given all of our efforts to complete this transaction,'' Detroit Diesel said in a statement. ``Based on our extensive investigation and analysis of the company, however, the combined cash and DDC stock package of $16 was a fair offer.''
Outboard Marine stock rose 87.5 cents to $17.75 in consolidated trading on the New York Stock Exchange. Detroit Diesel stock rose 25 cents to $24.50 on the NYSE.
Greenway Partners principals Al Kingsley and Gary Duberstein were not immediately available to comment on the deal or on their plans for operating Outboard Marine.
With $1.12 billion in fiscal 1996 revenues, the company is the second largest maker of boat engines behind Brunswick Corp.'s Mercury Marine unit, and also produces the Chris-Craft, Four Winns, Sea Swirl and Grumman brands of pleasure boats, among others.
Outboard Marine spokeswoman Marlena Cannon said the company has not received all of the details on its future operating structure, but added, ``We're all glad that resolution has come.''
Outboard Marine's management had grown increasingly anxious over the past several weeks and had said uncertainty over the two bids was hurting its business.
Outboard sent a letter Thursday to Greenmarine urging prompt action. ``The company must resolve this process as soon as possible in order to prevent further deterioration of the company's business and financial condition,'' the letter said.
For the first nine months of fiscal 1997, Outboard Marine's net loss grew to $26.7 million from a loss of $14.9 million a year earlier.
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