TALKING POINT/GENCORP INC <GY>
The surprise 2.2 billion-dlr tender
offer for Ohio-based conglomerate GenCorp Inc will not be
enough to buy the company, analysts said.
    Analysts estimated the 100 dlr-per-share offer from General
Partners is 10 to 20 dlrs per share below the breakup value of
GenCorp. However, market sources and analysts said  uncertainty
surrounds any transaction because of the legal challenges to
Gencorp broadcasting licenses.
    Gencorp's stock rose 15-3/4 to 106-1/4 in heavy trading.
    "The expectation is either there will be someone else or
the bidder will sweeten the offer hoping to get management's
cooperation," said Larry Baker, an analyst with E.F. Hutton
group.
    Analysts said there is concern about challenges to
Gencorp's broadcast licenses for two television and 12 radio
stations. Some of the disputes, dating back about 20 years,
were brought by groups that alleged improper foreign payments
and political contributions.
    "I think it kind of muddies an already muddy situation,"
said Baker of the offer.
    Some arbitragers said they were concerned the ongoing issue
might be a stumbling block or result in a long period of time
for any transaction.
    A source close to General Partners, however, said General
Partners would apply to the Federal Communications Commission
for special temporary authority to hold the broadcast stations.
The source said if approved, the authority would allow a
transaction to be carried out.
    If it received the "short-form" approval, General Partners
would set up a trust which would hold the broadcasting
properties until the licensing situation is resolved.
    General Partners is equally owned by investors Wagner and
Brown and glass-maker AFG Industries Inc.
    Some market sources speculated an outside buyer, such as
General Partners, might even be be a catalyst to resolution of
the challenges since it would carry out GenCorp's plan to sell
the stations.
    GenCorp earlier this month reached an agreement with Walt
Disney Co to sell its Los Angeles television station, WHJ-TV.
Disney would pay 217 mln dlrs to GenCorp and 103 mln dlrs to a
group that challenged the station's license.
    GenCorp also has a pending agreement to sell WOR-TV in
Secaucus, N.J. to MCA Inc for 387 mln dlrs.
    General Partners said it intends to keep the company's
plastics and industrial products businesses and its tires and
related products segment.
    Charles Rose, an analyst with Oppenheimer and Co, said
that, on a breakup valuation, the company might be worth as
much as 125 dlrs per share. Rose estimated the aerospace
business could bring 30 to 40 dlrs per share or one billion
dlrs, as would DiversiTech, the plastics unit. Broadcasting,
including assets pending sale, might be 30 to 40 dlrs per
share, he said.
    The company, formerly known as General Tire
and Rubber Co, also has a tire business Rose estimated would be
worth five to 10 dlrs per share. He estimated the bottling
business might also be worth several dollars per share, he
said.
    Analysts said GenCorp chairman A. William Reynolds, who
became chairman last year, has been emphasizing the company's
Aerojet General and DiversiTech General businesses. GenCorp,
founded in 1915, became an unfocused conglomerate over the
years and analysts believe reynolds has helped it to improve.
    "The management's doing a very fine job in trying to deal
with the non-strategic assets of the company," Rose said.
    Analysts expect GenCorp to resist the tender offer, but
they declined to predict what steps the company might take.
They said it would be possible the company might consider a
leveraged buyout or restructuring to fend off the offer.
    General Partners holds 9.8 pct of GenCorp stock, and there
was some concern about "greenmail." Greenmail is the payment at
a premium for an unwanted shareholders' stock.
    "I would doubt they would greenmail them, but nothing
surprises me anymore," said Rose.
    GenCorp has not commented on the offer. It has retained
First Boston Corp and Kidder, Peabody and Co as advisers.
   
 Reuter
