High Noon: Showdown time for Bendix

Showdown time for Bendix

The matchup is reminiscent of the classic Old West confrontation between a brash young gunslinger and the grizzled veteran with a dozen notches on his gun. William Agee, 44, the Harvard Business School whiz kid who heads the Bendix Corp., is facing a showdown with Harry Gray, 62, the seasoned hustler who began his career selling Dodge trucks for a Chicago dealership and went on to become a renowned conglomerate builder as chairman of United Technologies Corp. In the newest twist in a complex takeover struggle, United Technologies announced last week that it was joining forces with Martin Marietta Corp. in an unprecedented double-team effort to acquire Bendix and divide its assets between them.

Bendix, a diversified manufacturer of auto and aerospace parts, machine tools and other industrial products, started the Shootout three weeks ago by making an offer of about $1.5 billion to buy Martin Marietta, an aerospace firm that also makes chemicals and building materials. Martin Marietta not only rejected the offer, but quickly responded with a counterbid to buy Bendix for some $1.5 billion. At about the same time, Martin Marietta began secret negotiations with United Technologies, which had been rumored to be interested in acquiring Bendix.

The talks culminated in a marathon meeting between Harry Gray and Thomas Pownall, president of Martin Marietta, on the afternoon and evening of Sept. 2 at the offices of United’s New York City lawyers. With a handshake shortly before midnight, the two executives agreed that both their companies would offer to buy Bendix for approximately $1.5 billion. If a majority of Bendix shareholders sold out to either of them, the winner would assume control of Bendix, and then the two firms would carve up the captured company. The details have not been worked out, but United would probably take Bendix’s automotive and machine-tool businesses, while Martin Marietta would get several lines of aerospace products.

Agee was caught off guard. Says a top executive of a company that buys Bendix products: “I think that Agee is in over his head. When he makes a move, he doesn’t take into consideration what someone else might do.” Bendix’s immediate response was to raise its offer for Martin Marietta to about $1.6 billion. Agee also tried to get in touch with Martin Marietta officials to propose calling off the whole game with a “mutally agreed withdrawal.” Martin Marietta was not interested.

When Gray became United’s chief executive in 1972, the company was known chiefly for its Pratt & Whitney jet engines. Since then, he has expanded by buying several firms, including Otis Elevator in 1976 and Carrier, the air-conditioner manufacturer, in 1979. Over the years, Gray’s opponents have reportedly called the slow-speaking but fast-moving Georgian a robber baron, a buzzard, Dracula, Jack the Ripper and King Kong. Few of his takeover thrusts have been thwarted, however.

Bendix’s unenviable position results to some degree from the animosity toward Agee in the business community. In the tight-knit world of top management in corporate America, Agee is an unwelcomed outsider. This is due at least partly to his relationship with Mary Cunningham, 31, a former Bendix vice president who resigned in October 1980 in the wake of charges that she was having a romance with Agee. After denying the accusation at the time, the two married last June. That episode still haunts Agee. Says one of Wall Street’s most prominent merger makers: “No one wants to be taken over by Agee. He made a fool of himself with Mary Cunningham. Other corporate managers don’t respect him.”

Nonetheless, no one belittles Agee’s bottom-line success. Since he became chief executive of Bendix in 1976, the firm’s annual operating profits have more than doubled, to $205 million last year. If United Technologies acquires Bendix, some company insiders speculate that Gray, who is expected to retire in three years, might ask Agee to stay on as heir apparent. One of his competitors for that spot could be Alexander Haig, who left his post as president of United Technologies to become Secretary of State but returned last week as a consultant.

No matter what happens now, Agee will come out of the takeover battle a wealthy man. If either bid for his company goes through, the Bendix stock that Agee holds will be worth at least $1 million. In addition, Bendix’s board of directors voted last week to give the firm’s top 16 executives so-called golden-parachute contracts. In Agee’s case, this action guarantees him severance pay of about $4 million if he is fired by new management.