Japanese buy Gould

For anyone wondering what Chairman James F. McDonald's next movefor Gould Inc. would be, the answer became crystal clear Tuesday asTokyo-based Nippon Mining agreed to purchase the $650 million RollingMeadows company for $1.1 billion, or $23.50 a share.

On the news, the company's shares climbed to $22.75 a share, up$7.12 1/2 for the day.

Tokyo-based Nippon Mining, one of Japan's 50 largest industrialcompanies, is no stranger to Gould. For close to seven years, bothcompanies have engaged in numerous joint ventures, principally theircopper foil manufacturing venture in operation since 1981, and ajoint marketing venture for Gould's small mainframe computers thatwas inked this year.

Starting in March, Gould's investment banker First Boston Corp.began investigating both a management-led buyout as well as potentialtakeover offers from other firms, McDonald said Tuesday during aninterview. He said that the subject of a Nippon Mining purchase hadcome up well before that in casual discussions during McDonald'sfrequent trips to Japan.

In the end, the overtures from potential buyers other thanNippon Mining "were nothing more than a phone call. . . . We didn'tsee the match or synergism," and the management buyout idea wasabandoned fairly early to concentrate on a deal with Nippon. "The(management buyout) wasn't the best deal for our shareholders; theNippon deal is," said McDonald.

According to Peter Rona, president and chief executive of IBJSchroder Bank & Trust Co., Nippon Mining's financing manager andadviser for the deal, said that talks between First Boston and Nipponbegan formally this summer. What attracted the company most, hesaid, were the current venture businesses it already holds withGould, though he admitted that Gould's computer business is "not anarea where Nippon is knowledgeable. We will have to study thatsituation."

A definitive offer was presented to Gould's board in "the lastcouple of days," said Rona, and Gould's board accepted the offerTuesday afternoon.

Rona said Nippon Mining's management anticipated no major cutsof Gould's 6,500 employees due to the acquisition, saying thatGould's current collection of three businesses - test andmeasurement, information systems, and materials and components -would be "in a growth mode" under Nippon. Gould earlier this monthcut 40 workers at headquarters - roughly one-third of its staff.

McDonald's oft-criticized tenure during the last two years hasbeen spent whittling the once-$2.2 billion manufacturer of electronicand computer products down to what will be a $650 million company."Over $1 billion for a $650 million-revenue company is a veryattractive deal," said Julian Menear of Pershing & Co.

Only Monday, Gould had announced the definitive agreement tosell its Glen Burnie ocean systems division to Martin Marietta Corp.for $117 million. This year alone, Gould has reached agreements tosell its antisubmarine warfare division, its industrial automationunit, and, most recently, its semiconductor operation, and all butone unit of its defense division, Navcom.

In 1986, the company had pledged to sell its five-businessdefense division. McDonald said Gould will definitely settleNavcom's contract disputes and will probably sell the unit by early1989.

Regarding his own future, McDonald stays a man of few words.He'll stay on through the acquisition, but adds, "I think we'll beworking on a transition plan."