Opinion ID: 583590
Heading Depth: 2
Heading Rank: 2

Heading: Formica's LBO Discussions

Text: 22 In the meantime, in August and September 1988, Langone considered acquisitions of and mergers with other manufacturing companies, and he received inquiries from three investment banks concerning possible acquisition scenarios. With respect to two of the latter inquiries, from The First Boston Corporation and Bass Group, respectively, the discussions were quickly discontinued. The third such inquiry, from Dillon Read & Co., Inc. (Dillon Read or Dillon), led to continued discussions that ripened into the eventual 1989 LBO agreement. 23 The Dillon courtship began on September 30, when, at the suggestion of one of Formica's outside directors, Dillon telephoned Langone to state that it had taken an initial look at Formica and to ask whether Langone would be interested in discussing the concept of an LBO. A meeting was arranged, and on October 4, Langone and Dillon met briefly to discuss the feasibility of an LBO. On or about October 18, they again met briefly, and Langone indicated his interest in further exploration. On October 22, members of Formica's management and Dillon held a substantive meeting to discuss the LBO possibility. Dillon indicated that, though it had the financial ability to effect a buyout, it would have to do substantial due diligence before even drafting a proposal. Thereafter, Formica began to furnish Dillon with financial information in connection with the due diligence review. In January 1989, Formica consulted its attorneys and investment bankers with respect to the Dillon negotiations. On February 6, 1989, the Formica board of directors conditionally accepted a management-led proposal for an LBO at $18 per share. 24 Eventually, an LBO tender offer closed on May 3, 1989, at a price of $19 per share. GAR did not tender its shares and hence did not pay Glazers any premium.