SCM Officers Withdraw Bid to Buy Firm

NEW YORK —  Senior managers of SCM Corp. and Merrill Lynch Capital Markets reported late Friday that they had ended a buy-out agreement for SCM rather than try to top a competing British conglomerate’s $72-a-share takeover bid.

The move appeared to clear the way for Hanson Trust PLC to proceed with its $878-million cash offer for SCM, though SCM and Merrill Lynch said they intended to continue exploring alternatives for a transaction.

The SCM managers and Merrill Lynch said earlier this week that they had a definitive agreement for buying out SCM at $70 a share, or about $854 million, which would be paid partly in cash and partly financed with company assets.

But Hanson Trust countered with its higher offer Tuesday, and Merrill Lynch said Friday that it no longer intended to proceed with its offer to buy SCM shares.

Hanson Trust, a British company that already owns U.S. companies making everything from hot dogs to shoes, set off the bidding for SCM on Aug. 21 with an unsolicited bid of $60 a share for all of its issued stock.

SCM, best known for its Smith-Corona typewriters but also a major chemicals and coatings producer, rejected the offer as “inadequate” but left the door open for Hanson Trust to sweeten the offer.

In the meantime, SCM senior managers began exploring with Merrill Lynch the possibility of buying the company out, then making it a subsidiary of a new company to be formed by a merger of SCM and Merrill Lynch Capital Markets. But Hanson raised its offer as soon as SCM and Merrill Lynch said they were arranging financing for a leveraged buy-out.

Wall Street analysts said Merrill Lynch would receive about $10 million for its services even if it did drop out of the bidding for SCM.