Emery Air Freight Corp topped aleveraged buyout offer for Purolator Courier Corp by about 40
mln dlrs, but Wall Street is reacting as though another offer
may surface.
    Purolator's stock climbed 5-3/8 today, to 40-1/8, 1/4 over
Emery's 40 dlr per share offer. Emery topped a 35 dlr per share
or 268 mln dlr offer from E.F. Hutton LBO Inc.
    Some analysts said the latest, 306 mln dlr offer for
Purolator exceeded their expectations.
    Several analysts previously had said they saw takeover
values for the package delivery company in the 35 dlr per share
range. At least one, however, estimated the company could be
taken over in a range of 38 to 42 dlrs per share.
    Analysts today would not venture to say whether another
offer could be made, but some arbitragers still held to the
belief that the bidding could go higher.
    "They have no choice to seek out the best possible offer.
Emery has shown the courage to go forth," said one arbitrager,
who speculated other courier companies may also emerge as
bidders.
    "It makes sense," said James Parker of Robinson Humphrey.
But "It won't make out as well as they think. They won't get a
100 pct of the synergies."
    Analysts said the acquisition could cost Emery earnings in
the short term, but long term, after eliminating redundancies
and selling other Purolator assets, it should boost Emery's
profitability.
    Parker said a combined Purolator and Emery would rival
United Parcel Service as the second largest U.S. package
delivery company after Federal Express Corp &lt;FDX>, which has 47
pct of the market.
    Parker speculated that the combined Emery-Purolator would
have about 24 pct of the six to seven billion dlr delivery
business.
    "This will make Emery a bigger factor in the light weight
(delivery) business, but it will not make them a power house,"
said Douglas Arthur of Kidder, Peabody and Co.
    Purolator today declined comment on the Emery offer, and
its chairman Nicholas Brady did not return a phone call.
    E.F.Hutton LBO also declined comment on the Emery offer,
but said it extended the expiration and withdrawal period on
its offer to April six at midnight from today at midnight EST.
    One analyst speculated the extension makes it more likely
Hutton will attempt another offer. However, he was skeptical a
company outside the package delivery industry would want to
outbid 40 dlrs per share because it would not have the same 
synergies as a courier company.
    Since Purolator agreed in late February to a buyout by some
of its management and the E.F. Hutton Group &lt;EFH> subsidiary,
speculation has arisen that more bidding was to come.
    The buyout was surrounded by controversy since a Purolator
board member, Doresy Gardner resigned in March. Gardner said he
believed a better offer could be made by another entity.
    A spokesman for Gardner today said the former director had
no contact with Emery, nor did he have any other buyers lined
up for Purolator.
    Purolator's deal with Hutton was also called into question
by a shareholder suit filed earlier this week, which attempted
to stop the tender offer to allow another bidder to come forth.
Hearings in a New York state court were delayed until Monday.
    Arbitragers had said they believed the Hutton offer could
be bettered because the Wall Street firm was not planning to
keep its cash tied up in Purolator. Hutton is providing a 279
mln dlr "bridge" loan that would later be replaced with other
debt. Hutton would maintain a majority interest in Purolator.
    Hutton sources have said the firm was in fact facing risk n
its investment since it did not know when it could reclaim its
279 mln dlr loan.
    Emery last year lost 5.4 mln dlrs on revenues of 887.5 mln
dlrs. Purolator lost 57.6 mln dlrs on 841.4 mln dlrs in
revenues.
 Reuter
