Borden OKs merger pact with KKR

September 24, 1994|By New York Times News Service

NEW YORK -- Borden Inc. signed a definitive agreement yesterday to be acquired by Kohlberg Kravis Roberts & Co. for $2 billion, clearing another hurdle in the buyout firm's quest to take over the troubled consumer-products giant.

After meeting for five hours late into the night Thursday, the Borden board signed off on the agreement, subject to final approval by its lawyers on the language of the accord. Kohlberg Kravis surprised Wall Street last week by offering $2 billion of RJR Nabisco stock for Borden in a complex deal.

Lawyers for both companies completed their negotiations in mid-afternoon. After consultation with the Borden board, the announcement was made an hour after the close of the New York Stock Exchange, where shares of Borden closed at $14, down 12.5 cents.

At that time Borden also released copies of a letter from Frank J. Tasco, the company's board chairman, to a friendly suitor, Paul B. Kazarian, saying that the board had reviewed a letter he presented to Borden management on Wednesday.

"Your letter again failed to provide information as to your ability to finance the type of transactions you refer to, even though we have been requesting that information for several months," Mr. Tasco wrote. Mr. Kazarian has said that he was first asked to provide his financial commitments Wednesday night.

In what a Borden spokesman termed a generous offer, Mr. Tasco's letter told Mr. Kazarian that "if you decide to make a substantive proposal we are prepared to work with you."

Yesterday's agreement between Borden and Kohlberg Kravis, however, appeared to reject a suggestion made by Mr. Kazarian on Thursday that Borden allow its shareholders to vote on an alternative buyout proposal that Mr. Kazarian would offer.

Mr. Kazarian's investment firm, Japonica Partners, said it was "disappointed the board did not choose a better course of action designed to maximize shareholder value."

The acquisition agreement effectively creates more momentum in favor of the Kohlberg Kravis proposal and hastens the day when Borden's 41,000 shareholders must decide whether to tender their stock to Kohlberg Kravis.

The firm is offering $14.25 a share in stock for Borden.

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