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The eBearing News
July 19, 2004
General Bearing Ups Management
Buyout Offer by 14%
copyright © 2004 eBearing Inc.
General Bearing Corp. (USA) management has sweetened its buyout offer for the company to $4.00 per share,
upping its standing $3.50 per share offer by 14%.
The management group, via GBC Acquisition Corp., recently rekindled a buyout offer
it had abandoned in 2001, saying the costs of remaining publicly traded are now too high.
eBearing detailed the latest offer and its history on May 11, 2004:
• article: General Bearing revives management buyout bid
While the 2000 - 2001 offer had been priced at $6.50 per share, this most recent offer originally
carried a $3.50 per share pricetag.
That initial $3.50 per share offer came under fire almost immediately from both private and institutional
shareholders. While acknowledging the thinly-traded stock was underpriced in the market, they pointed out
its current and future value was much higher. Ironically, they argued management is running the company
well and that its prospects are bright, so the $3.50 offer was an attempt by management to "steal" the company.
One institutional investor told eBearing he believed General Bearing is intentionally "laying low" -- not issuing
press releases or trumpeting the business in any way -- in an attempt to "stay under investors' radar." Doing
so, he said, helps any company, no matter how well run, draw little attention to itself, allowing its shares
to remain undiscovered and relatively undervalued. If the company was better known, he said, management wouldn't
be able to, "steal it for such a low price."
Announcing the sweetener to $4.00 per share, however, General Bearing tackled that very issue head-on: "As
a condition to financing the offer and the merger, Keybank requires personal guarantees from Seymour Gussack and
David Gussack. Both Seymour Gussack and David Gussack have stated that they will not guarantee any additional
financing. Therefore, stockholders should not expect that GBC Acquisition Corp. will further increase its offer price."
General Bearing shares almost immediately ran to the $4.00 range, trading today at $4.03 on the
NASDAQ Small Cap market. Its 52-week
high is $4.17, which it reached a little less than one year ago.
Management, through GBC Acquisition, currently holds 66% of the outstanding shares. Although GBC Acquisition
said it wants at least 90% of the 3.7 million shares outstanding to be under its control
before it will continue with the buyout, the group also reserves the right to waive that condition.
General Bearing's 2003 sales were approximately $61.5 million; the company
employs approximately 150 people across its New York headquarters and three plants in China. At $4.00,
the company's P/E ratio is approximately 33.6.
The $4.00 per share offer stands through August 13, 2004.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Bruce Carr edited this content.
Copyrighted material; unauthorized reproduction prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2011, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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