Thyssen to Acquire Giddings for $631 Million

A battle for control of the largest U.S. maker of machine tools, Giddings & Lewis Inc., drew near an end Thursday when the company agreed to be acquired by German steel and engineering giant Thyssen for $675 million.

The $21-per-share Thyssen offer overtook a rival $631-million, $19-a-share offer made in late April by Harnischfeger Industries Inc., which Giddings management rejected last month as inadequate.

Announcement of the Thyssen agreement led Milwaukee-based Harnischfeger to announce it may drop its 6-week-old effort to take over Giddings.

“If Thyssen’s bid for $21 per share proves bona fide to us, we will not pursue our tender offer for G&L;,” Harnischfeger Chairman Jeffery Grade said in a statement.

In Nasdaq trading, Giddings shares rose $1.73 to close at $20.73.

Wall Street analysts said the Thyssen deal is likely to be completed, although it may face obstacles in Washington.

Machine tools are militarily sensitive, and the Defense Department has intervened in the past in mergers that would have put such technology in the hands of non-U.S. firms.

“Giddings & Lewis has some very important proprietary technology. . . . So that’s an issue. Antitrust [issues] I don’t think can be shrugged off either,” said Robert McCarthy, an industry analyst at ABN AMRO Chicago Corp., an investment bank.

However, the amount of business that Fond du Lac, Wis.-based Giddings does with the government is probably not large enough to pose a problem, Giddings Chief Executive Marvin Isles said in an interview.

“We did less than $2 million in total U.S. government sales last year. We don’t think it will be a factor whatsoever,” Isles said.

On the antitrust issue, he said, Thyssen has only minor U.S. operations. “Most of their [Thyssen’s] capability is outside of North America. So we don’t think that’s going to be an issue at all,” Isles said.

On May 8, Giddings’ board of directors rejected the offer from Harnischfeger, which later said it would take its bid directly to Giddings shareholders.

Giddings said its board looked at several strategic alternatives after Harnischfeger unveiled its bid in late April.

Giddings’ name, managers and headquarters will remain in place under the Thyssen agreement, Isles said. No plant closings or layoffs are expected. The firm, which makes automation products and machine tools, reported 1996 revenue of $763 million.

Thyssen, based in Duesseldorf, has annual revenue of about $26.2 billion and owns 320 companies worldwide in a variety of industries. Harnischfeger makes machinery for papermaking, mining and materials handling. Its 1996 revenue was about $2.9 billion.