Buyout offer turned down by Lockheed directors.

Buyout offer turned down by Lockheed directors

The board of directors of Lockheed Corp. last week rejected a buyout offer by Texas billionaire Harold Simmons that would have taken the Calabasas-based defense contractor private.

The board turned down the $1.6 billion, or $40 a share offer, saying the deal would saddle the company with too much debt. In addition, members of the board said they were concerned that simmons would not be able to raise the money necessary to complete the transaction.

The action sparked speculation about Simmons next move.

Industry analysts had expected that the board would turn down the proposal and that Simmons will launch a proxy fight for control of the Lockheed board, as he did last March. Lockheed must hold its annual meeting, where board members face re-election, by April.

"I think a proxy fight is a reasonalbe possibility, although a lot can happen by April," said Lawrence Harris, a defense industry analyst with Bateman Eichler, Hill Richards in Los Angeles.

He said the $40 a share offer was probably not high enough to entice board members to approve the proposal. In addition, the board may have felt that possible upcoming events may boost Lockheed stock, Harris said.

Those events include Lockheed winning the contract to produce the Advance Tactical Fighter, which could be worth more than $100 billion> settlement of a dispute with the Navy to continue production of the P-7A attack plan, and a war in the Persian Gulf.

Simmons, who holds almost 20 percent of Lockheed stock, has been trying to gain control of the company for nearly two years. Simmons' latest proposal would have required that Lockheed use $800 million of its assets to finance the deal.

At the meeting, the board also added four new members: Robert Kirby, 65, chairman of Capital Guardian Trust Co. in Los Angeles> Frank Savage, 52, senior vice president of The Equitable Life Assurance Society and senior vice president of the The Equitable Capital Management Corp., New York> retired Adm. Carlisle A.H. Trost, 60, former chief of Naval operations> and Douglas Yearley, 54, chairman and chief executive office of Phelps Dodge Corp. of Phoenix.