Hedge Funds Bid for Three Companies

ValueAct Capital and Acxiom; Jana Partners and Houston Exploration; Steel Partners and Bairnco.
Stephen TaubJune 21, 2006

In the past week or so, at least three hedge funds have made formal tender offers for three different companies. These three funds, as well as a number of other private investment partnerships, have been setting aside assets to pursue private-equity deals and buy other companies outright.

Take the case of ValueAct Capital, which has been trying to buy Acxiom for nearly a year. On Wednesday, ValueAct announced that it will try to buy up to 7 million shares of the direct marketing software supplier at $25 per share in cash if its three director nominees are elected to the company’s board.

The Associated Press pointed out that if ValueAct’s board nominees are elected and its tender offer is accepted, the hedge fund will own about 19.7 percent of Acxiom’s shares. This is the most amount of stock that ValueAct could own without triggering Acxiom’s poison pill, noted the AP.

Last week, Jana Partners offered to buy Houston Exploration for $62 per share. The $5 billion hedge fund, which had supported Carl Icahn’s campaign against Time Warner, currently owns 12.3 percent of the oil and natural gas producer’s outstanding shares.

“We believe that there is still tremendous value in Houston Exploration, but that it will continue to be destroyed as long as the company remains in the hands of those who show far less interest in maximizing this value than they do in transferring it to the company’s management,” Jana managing partner Barry Rosenstein wrote to the board of directors.

Jana noted that it had previously called upon the company to maximize shareholder value through a $650 million share repurchase and the exploration of strategic alternatives, including a sale of the company.

Houston Exploration recommended through a press release that its stockholders take no action at this time, adding that its board “will meet in due course to review and discuss the Jana proposal and will advise stockholders of its position.”

Also last week, Steel Partners II announced that its wholly owned subsidiary BZ Acquisition Corp. will launch a cash tender offer to purchase all outstanding shares of Bairnco for $12 per share. Steel Partners now owns about 15.5 percent of the outstanding shares of the maker of materials for the electronics industry.

“We have determined, after evaluating all our options, that commencing a tender offer would be in the best interest of all the shareholders,” said Steel Partners managing member Warren Lichtenstein, in a press release.

Through a press release, the company urged shareholders not to take premature action, adding, “Steel Partners has not yet commenced any tender offer and Bairnco’s board of directors has not made any decisions as to how it will respond consistent with its fiduciary duties.” It added that the Bairnco board will “carefully review and evaluate the terms and conditions of any Steel Partners tender offer” and follow with a timely recommendation to shareholders.