FTC OKs Bell Industries' acquisition of Milgray

Electronic News, Dec 23, 1996

Los Angeles--Bell Industries, Inc. said last week that its proposed $100 million acquisition of Farmingdale, N.Y.-based Milgray Electronics, Inc., has cleared the antitrust review of the Federal Trade Commission. Earlier, Bell Industries announced (EN, Dec. 2) its plan to acquire Milgray Electronics in a two-step transaction.

Now, Bell Industries has initiated a cash offer for all of Milgray's shares at a price of $14.77 per share. The tender offer is scheduled to expire on Jan. 7, 1997 and is conditioned upon certain customary conditions, including the tender of at least 66 2/3 percent of Milgray's outstanding shares. Pursuant to a tender agreement, Milgray's majority shareholder, Herbert Davidson, chairman/CEO/president, who beneficially owns approximately 55 percent of Milgray's common stock, has tendered all such shares. Mr. Davidson will be named to Bell's board of directors and serve as vice chairman.

The tender offer will be followed by a second-step cash merger at the same price.

When the deal is done, Richard Hyman, Milgray's executive VP/COO, is to become president of Milgray, reporting to Bell Industries' new president, Gordon Graham, who reports to Bell Chairman Ted Williams. Mr. Graham replaced Bruce Jaffe, who resigned as Bell Industries' president several weeks ago over "policy differences" which none of the parties would detail (EN, Nov. 25).

Mr. Hyman also is in line for the post of executive VP of Bell's Industrial Distribution Group. All Bell and Milgray sales and marketing would report to him. Both units are to remain separate entities. Mr. Graham will maintain responsibility for all the firm's electronic and non-electronic distribution businesses, which also include graphic arts and automotive aftermarket products. Mr. Hyman will essentially be responsible for most day-to-day electronic distributor operations of the entire company: everything at Milgray and all electronic distribution sales and marketing at Bell.

For the four quarters ended Sept. 30, 1996, Bell Industries had total sales (including non-electronic distribution) of $611 million and net income of $16.1 million. Milgray, for the same period, had sales of $275 million and net income of $8.6 million. On a pro forma basis, assuming the transaction had occurred on Oct. 1, 1995, the combined sales during the four quarters ended Sept. 30, 1996, would have been $887 million, with net income of $18 million.