Cooper Holds ‘Friendly’ Talks With McGraw

CHICAGO —  Cooper Industries Inc. said Tuesday that it is holding “friendly” talks with McGraw-Edison Co. that might lead to a merger agreement between the companies.

Cooper already has launched a $65-a-share tender offer to acquire McGraw-Edison, outbidding the investment firm Forstmann Little & Co., which earlier had proposed a $59-a-share leveraged buy-out of McGraw-Edison.

In a statement late Tuesday, Cooper said its chairman and chief executive, Robert Cizik, and McGraw-Edison’s chairman and chief executive, Edward Williams, were holding talks about Cooper’s tender offer.

“They characterized their discussions as ‘friendly’ and said they hoped the discussions would lead to a merger agreement between the companies,” Cooper said.

Would Support Bid

“Williams said that, if satisfactory merger terms can be agreed upon, he intends to recommend to the McGraw-Edison board that it approve Cooper’s proposed merger agreement and endorse Cooper’s tender offer,” the company added.

Cooper also quoted Williams as saying that Forstmann Little had advised him that it “does not intend to increase its price.”

Forstmann Little executives were said to have left for the day and could not be reached for comment on Cooper’s announcement, which was made after normal business hours.

The announcement also came after the close of New York Stock Exchange trading, during which McGraw-Edison’s common stock climbed 25 cents a share Tuesday, to $63.75, after spurting $8 on Monday. Cooper’s common stock also gained 25 cents Tuesday, closing at $28.875 a share on the Big Board.

However, one of Forstmann Little’s general partners said earlier Tuesday that the firm might join forces with another corporation in its effort to acquire McGraw-Edison, a Rolling Meadows, Ill.-based maker of industrial and electrical equipment.

Volunteered to Help

Theodore J. Forstmann said several corporations had contacted him to see if his firm wanted help in taking control of the company.

“We always had options,” Forstmann said. “And one of them has now become a potential corporate partner involvement with this. I don’t know whether we will do that or not.”

He declined to name any of the companies or discuss particular strategy that Forstmann Little might use to achieve its leveraged buy-out proposal. In a leveraged buy-out, the purchase is made with largely borrowed funds that are repaid from the target company’s revenue or from the sale of its assets.