Another buyer for Lear Corp. still could emerge to compete with Carl Icahn's $5.3 billion buyout offer, company officials said today during a conference call with Wall Street analysts.
Lear entered into an acquisition agreement on Feb. 9 with American Real Estate Partners L.P. that gave Lear 45 days to shop for a higher bid.
"While the solicitation period ended on March 26, we have had discussions with certain parties that originated during the solicitation period," said Bob Rossiter, Lear's chairman and CEO, during a conference call today.
Lear's first-quarter net income more than doubled to $49.9 million from $17.9 million last year, and is driving speculation that Icahn will need to increase his offer to please shareholders.
Icahn's bid includes the assumption of about $2.5 billion in debt and an offer to buy out all Lear shareholders for about $2.8 billion, or $36 a share. Lear's stock closed at $37.10 today, up $1.44 or about 4 percent from its close of $35.66 on Tuesday, April 24.
Some shareholders, led by Pzena Investment Management L.L.C., of New York City, have argued that Lear is worth more than $36 a share.
During today's conference call, one analyst asked Lear directly about the chances of another bid.
"There is a possibility," said Daniel Ninivaggi, Lear's executive vice president and general counsel. "We have been in these discussions for quite awhile and we haven't received another acquisition proposal, so you will have to handicap that yourself, but there is a possibility, sure."
Lehman Bros. analyst Brian Johnson issued a report today saying that Lear's improved earnings may pressure Icahn to raise his bid.
Still, Johnson said it is unlikely that another Tier 1 supplier will bid for Lear and said potential private equity suitors might be turned off by low margins in Lear's seat manufacturing business.
"We do not expect a heated auction for Lear, and as a result, we believe that shareholders will be able at best to compel Icahn to sweeten its offer by a couple of dollars, and we would expect the transaction to happen at or near the $36 current offer," Johnson said.
Lear's shareholders are scheduled to vote on Icahn's buyout offer at the company's annual meeting on June 27.
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