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Baker Industries, Inc. Deal - Lehman Brothers Collection

Baker Industries, Inc.

Company Deal290,000 shares of common stock (par value $1 per share)
Transaction TypeCommon Stock
Deal DescriptionBaker Industries, Inc., offered 225,000 of the 290,000 shares in this deal to the underwriters, and 65,000 were sold by the selling stockholders. No portion of the proceeds from sale of shares acquired from the selling stockholders was received by the company. The group of selling stockholders consisted of S. R. Baker, Harold Miller, Jack S. Stearman, and Harold W. Lewis. Of the net proceeds from the sale of shares sold by the company, $2,750,000 was to be used for additional capital expected to be necessary for the following three years to support further growth of central station services and $2,450,000 for the repayment of short-term bank loans. The short-term loans were incurred to provide capital for expanding the company's central station operations. The balance of the net proceeds, estimated at $4,600,000, was to be used for purchase costs of possible future acquisitions of other companies in related fields and, in the case of central station acquisitions, for related development expenses. These development expenses, which usually exceeded acquisition costs, included capital costs for central stations and working capital. At the time of the deal, the company was conducting negotiations with various firms and individuals who were looking to such future acquisitions for cash or stock, although no definitive agreements had been concluded at the time. The company expected to bid for or offer to purchase contracts and installations pertaining to certain cities if they were offered for public sale by American District Telegraph Co. (ADT). In a 1967 antitrust action, a U. S. District Court decree required that ADT divest itself of central station contracts in a number of cities representing annual service revenues ranging from $125,000 to $200,000 per city. At the time of the deal, there was no assurance that Baker would be able to consummate any such purchase from ADT.
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