LOS ANGELES One of the
oldest service center chains in the country might be in play as
A.M. Castle & Co. has adopted a shareholder rights plan in
an apparent move to fend off a possible takeover attempt by
private investment firm Platinum Equity LLC.
The rights plan is designed to
reduce the likelihood of a "coercive takeover," the Oak Brook,
Ill.-based company said. Often referred to as "poison pills,"
these plans are widely viewed as designed to discourage outside
Platinum Equity disclosed in an
August filing with the U.S. Securities and Exchange Commission
that it had purchased 6.05 percent of A.M. Castles
shares. The Los Angeles-based private equity firm, run by
private investor Tom Gores, is already the controlling
shareholder in Chicago-based distribution chain Ryerson Inc.,
through which A.M. Castles shares were purchased.
Platinum Equity said in the SEC
document that its intention was "to engage in discussions" with
A.M. Castle and discuss "strategic alternatives" that could
potentially include an acquisition of the chain.
A.M. Castles rights plan
will enable its shareholders to "realize the long-term value"
of the company by "safeguarding" the boards ability to
take actions that will create value for shareholders, it said.
The company is issuing one preferred stock purchase right for
each share of common stock outstanding on Sept. 11, which could
be exercised if an outsider acquires 10 percent of its common
stock or announces a tender offer that would result in
A spokesman for Platinum Equity
declined to comment.
A.M. Castles announcement
didnt appear to dampen takeover speculation. The
companys common stock on the New York Stock Exchange
increased 9.3 percent Friday to $13.03 per share.
Platinum Equitys ownership
of service centers hasnt been limited to Ryerson. In
2008, near the peak of the steel market, it sold Atlanta-based
PNA Group Holding Corp. to the largest U.S. service center,
Reliance Steel & Aluminum Co., Los Angeles, for $1.1
A.M. Castle, founded in 1890,
posted a second-quarter net loss of nearly $3 million vs. net
income of $3.7 million in the year-ago quarter despite a
16.6-percent rise in sales to $329.4 million. It blamed the
loss on adjustments related to financial instruments, including
commodity hedging, and costs associated to the departure of its
former president and chief executive officer, Michael H.
Goldberg, who resigned in May.