GAF would win either way in battle for Borg

Like Humpty Dumpty, big old Chicago-based Borg-Warner is doing everything it can to stay on the wall and in one piece. The company has found a ``white knight'' in Merrill Lynch to help keep it propped upright in what might yet become a bidding war for the giant automotive parts, specialty chemicals, and security service company.

Merrill Lynch is backing an investor group that recently offered $48.50 a share, or about $3.76 billion, for 90 percent of Borg-Warner's stock. That offer was accepted Sunday by Borg-Warner's board of directors. When and if the deal is approved by stockholders, the company would be taken private in one of the larger leveraged buyouts since the $6.2 billion Beatrice deal.

GAF Corporation's Samuel Heyman is the reason Borg-Warner is worried. It was Mr. Heyman's $46 per share, $3.2 billion bid earlier this month that sent Borg-Warner management scurrying to line up the Merrill-Lynch group.

Mr. Heyman billed his original offer as ``friendly.'' But Borg-Warner managers apparently saw some sharp teeth and sense that Heyman would probably sell off everything but the chemical division and eliminate their jobs.

Securities analysts say Heyman wants Borg-Warner's speciality chemical business - a jewel that would help make GAF a major chemical company.

``I'm afraid that GAF still might come up with another bid,'' says Juliusz G. Sas, an analyst with Balis Zorn Gerard, a New York investment banking firm.

Heyman is known for being tenacious, earning his credentials by leading GAF in its vigorous, albeit unsuccessful, attempt to gobble up giant Union Carbide in 1985. Wall Street analysts say it's still possible Heyman will mount another, higher offer for Borg.

``They [Borg-Warner management] want to keep the company in once piece,'' says John P. Henry, an E.F. Hutton analyst. ``Earnings have been flattish, but they've been in some very tough industries.''

Even though the Merrill Lynch-led bid is considered to be about full value for the stock, it is possible for Heyman to bid more for the company because he bought most of his stock at an average price of only $37.50 per share.

Though Heyman may lose Borg-Warner's chemical business, it still will be hard for him to lose totally on this deal. If he sells GAF's stake in Borg-Warner, Heyman still stands to make $175 million for his effort.