UnionBanCal sees better offer; Middleby serves offer to TurboChef; Tecumseh told to stage director vote

By Aaron Hochman-Zimmerman

New York, Aug. 12 - Mitsubishi UFJ Financial Group Inc. has probably not won over UnionBanCal Corp. with its offer announced Tuesday, as the stock traded through the offer price.

Still, the deal to buy the rest of the California-based bank does seem more like a marriage than a rescue operation as in the recent case of another California-based lender.

Elsewhere, short-order turnaround specialists Middleby Corp. announced a hefty offer for TurboChef Technologies Inc. which has ovens in some of the world's best-known food chains.

Also, Tecumseh Products Co. was ordered by the Lenawee County Circuit Court to put two of its directors up for a confidence vote at a shareholder meeting.

Meanwhile, the Dow Jones Industrial Average saw the selling many expected on Monday as it gave up 139.88, or 1.19%, at 11,642.47, while the Nasdaq Composite Index lost 9.34 or 0.38% to finish at 2,430.61.

The S&P 500 dumped 15.72, or 1.20%, to close at 1,289.59.

UnionBanCal ponders tender

UnionBanCal announced that a new $63 per share tender offer totaling $3 billion for its common stock by Japan's Mitsubishi UFJ Financial Group follows a former $58 per share offer.

The offer represents an 8% premium to Monday's closing price.

UnionBanCal decided on June 22 that the April 26 offer of $58 per share undervalued the company, according to a press release.

The news of the prior offer came as a surprise to many in the market, but even the higher $63 per share offer may not be enough for the shareholders of UnionBanCal, said BMO Capital Markets analyst Lana Chan.

A better offer "around this level" may be enough to fill the stomachs of UnionBanCal's holders, she said, as UnionBanCal (NYSE: UB) traded through the offer price, gaining $7.32, or 12.58%, to close the day at $65.50.

The bank's ability to trade above the offer price serves to underscore its value despite the overall state of financial stocks, giving leeway to UnionBanCal to encourage its shareholders to reserve their judgment over the $63 tender offer until the company, along with its financial advisors, reviews the deal.

Plus, "the Bank of Tokyo-Mitsubishi has the ability to up the bid a little bit," Chan said.

The move by Bank of Tokyo is not a Bank of America Corp.-Countrywide Financial Corp. style rescue operation.

"They've performed better than their peers in terms of credit quality," Chan said about UnionBanCal.

A trader agreed that "UB is in decent shape," adding that Bank of Tokyo-Mitsubishi already owns approximately 60% of UnionBanCal.

"[Bank of Tokyo-Mitsubishi] thinks they're buying it on the down cycle," he said, adding that "there are quite a few others that have large chunks owned by foreign banks that may start thinking the same way," he said.

Middleby cooks up deal for TurboChef

Perennial deal-land performer Middleby served up an offer for TurboChef Technologies of $3.67 in cash and 0.0486 Middleby shares of common stock per TurboChef share, according to a press release.

The deal totals $200 million, but Middleby is also taking on $25 million in net operating losses.

"The deal isn't cheap by any stretch," said RBC Capital Markets analyst Amit Daryanani.

However, if Middleby can achieve the synergies it is hoping for, the deal may be a fair value at close to 8.5 times EBITDA, he said.

When asked to make a prediction, Daryanani said: "I would say the deal gets done."

"It's a classic Middleby deal," he said, about turning around an operationally challenged name with a strong presence in the industry.

TurboChef produces short-order cooking ovens for food behemoths McDonald's Corp. and Starbucks Corp.

"TurboChef has done an exceptional job of taking revolutionary cooking technology and successfully commercializing it," said Selim Bassoul, Middleby chairman and chief executive officer, in a statement.

The deal has received some criticism, but Middleby has a strong track record with its fixer-uppers.

To look at the last six acquisitions Middleby made, each has grown earnings by 5% to 15% within four quarters, Daryanani said.

"That's fairly respectable."

Shares of Middleby (Nasdaq: MIDD) burned off $4.53, or 7.86%, to $53.07.

Shares of TurboChef (Nasdaq: OVEN) rose by $0.38, or 6.79%, to $5.98.

Court orders Tecumseh meeting

Tecumseh Products will be forced to hold a shareholder meeting to determine the fate of directors Peter Banks and David Risley.

The Herrick Foundation announced that judge Timothy Pickard of the Lenawee County Circuit Court ordered the meeting to remove Banks and Risley to be held on Nov. 21, a press release said.

"We are very pleased with judge Pickard's order that calls for a special meeting of shareholders of Tecumseh Products Co. in November," said Jeff Caponigro, a Herrick Foundation spokesman, in a release.

"We believe the order is consistent with best governance practices and preserves important

shareholder democracy rights for the good of all shareholders," he added.

A shares of Tecumseh Products (Nasdaq: TECUA) ended unchanged at $28.69. B shares of Tecumseh Products (Nasdaq: TECUB) slipped by $0.02, or 0.08%, to finish the session at $26.43.

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