CONRAC <CAX> SOARS FOLLOWING MARK IV <IV> BID
Heavy buying by speculators boosted
Conrac Corp 7-7/8 to 29, higher than a 25-dlr-per-share cash
tender offer announced by Mark IV Industries Inc <IV>.
    "It's a case of ChemLawn euphoria," said one arbitrageur,
referring to a recent hostile tender that began at 27 dlrs per
share and ended when ChemLawn Corp <CHEM> found a white knight
willing to bid 36.50 dlrs.
    For Conrac, the arbitrageur said, 28 dlrs per share seemed
like an "appropriate price." Another said "it's too early to
project the outcome."
    "The market is speaking for itself and saying the 25 dlr
offer is inadequate," the second arbitrageur said. But he added
it was hard to make a case for Conrac being worth much more
than the 29 dlrs where the shares traded today.
    He noted the stock recently sold in the high teens and
there could be a downward risk of 10 dlrs or more if Conrac is
able to thwart Mark IV.
    Conrac urged shareholders to take no action while its board
studies the offer and confers with advisers. Conrac said it
would make a recommendation by April 17.
    A third arbitrageur noted Mark IV had been involved in
several takeovers previously and has proven itself to be a
determined bidder. "They're not beginners," he said.
    Another said Conrac might have trouble if it tried to find
another buyer. "It's a hodge-podge of non-related businesses,"
he said. "There is only a small universe of people who would
want to own the company as it's presently structured."
    Conrac is involved in video displays, computer software,
aircraft instruments, telephone answering machines, welding
equipment and other products.
    "I'm telling retail clients to sell and leave the rest for
those who can take the risk," said Rudolph Hokanson, analyst at
Milwaukee Co.
    He called the 25-dlr offer by Mark IV "fair value but on
the low side." "I don't think management was looking for a
buyer in any way before this offer," he said.
    Hokanson said Conrac has conservative finances and has
developed a reputation for quality products that serve niche
markets. He said management has done a good job of turning
around the telephone answering machine business.
 Reuter
