Hardinge Inc. directors have rejected a unsolicited takeover offer from Industrias Romi S.A., unanimously, calling the rival’s $92-million bid “grossly inadequate, opportunistic and not in the best interests of Hardinge and its shareholders.”
Hardinge directors also announced a new, one-year “shareholder rights plan," intending to ensure that all stockholders are properly compensated in any takeover attempt.
Romi, a Brazilian company, manufactures machine tools, plastic injection, and blow molding machines. It also produces component parts made of gray and ductile iron.
Hardinge, of Elmira, NY, produces vertical and horizontal machining centers, CNC lathes, grinding tools, and workholding equipment. Its brands include the Hardinge, Kellenberger, Bridgeport, Hauser, and Tschudin product lines.
The takeover offer was made public early this month, though Romi has indicated it made preliminary proposals as early as October 2009.
In letter to Romi CEO Livaldo Aguiar dos Santos, the Hardinge chairman Kyle Seymour and president/CEO Richard L. Simons acknowledged that their “business and share price have been depressed by the extreme global economic downturn and financial crisis.
“We understand why it makes sense for Romi to attempt to acquire Hardinge at the bottom of the economic cycle,” they wrote, “and at a time when the economic recovery is in sight (especially since you know the machine tool industry trails broader economic trends). However, we do not believe it is advisable for Hardinge to pursue a sale of the company at this time, and most certainly not for the grossly inadequate price you are offering.”
The executives asserted that Hardinge is well capitalized and well-positioned in the market, in expectation of a global economic recovery.
"We are disappointed that despite the positive response to our offer from Hardinge shareholders, Hardinge's board continues to refuse to engage in any meaningful dialogue to discuss our all-cash offer," said Aguiar dos Santos replied, in a statement. He pointed to Hardinge’s recent earnings statement to dispute the target company’s assertions.
“We believe that any objective analysis would clearly confirm that our offer is in the best interests of Hardinge's shareholders, offering them immediate liquidity at superior value,” the Romi CEO stated. He said Romi would prefer to negotiate a purchase with the Hardinge board, but indicated his group would appeal instead to Hardinge shareholders if the directors remain “focused on erecting further barriers that deny shareholders the value our offer would provide.”
The new shareholder “rights” will be distributed to all Hardinge stockholders as a non-taxable dividend on March 1, and will expire in one year. The rights are exercisable only if a person or group acquires 20 percent or more of Hardinge's common stock. Each right will entitle stockholders to buy one one-hundredth of a share of a new series of Series B preferred stock at an exercise price of $35.00.
If the rights are initiated because a person or group acquires 20 percent or more of Hardinge's common stock, all rights holders (except the buyer who triggered the plan) will be entitled to acquire a number of shares of Hardinge's common stock at two times the current market value.