Burlington Accepts Offer of $2.4 Billion : Morgan Stanley Heads Leveraged Buyout Group

RALEIGH, N.C. — Burlington Industries said Thursday that it has agreed to go private in a $2.4-billion leveraged buyout that is aimed at saving Burlington from a hostile takeover.

Burlington, the nation’s largest manufacturer of textiles, said the investment banking firm Morgan Stanley & Co. in New York is leading a group of investors that has agreed to purchase the company.

However, Burlington would continue to be managed by its current top officers, including Frank S. Greenberg, chairman and chief executive.

“We believe that we have fulfilled our commitment to maximize value to our shareholders,” Greenberg said in a statement. “Our board is proud to have completed a process which has produced this result for our shareholders.”

The Morgan Stanley group plans within a week to launch a tender offer of $76 for each of Burlington’s 31.6 million common shares and equivalents outstanding.

Stock Price Advances

After the announcement Burlington’s stock closed at $75.125 a share, up $2.875, on volume of 2.5 million shares in New York Stock Exchange composite trading.

The Morgan Stanley offer tops a hostile, $72-a-share tender offer for Burlington from New York investor Asher B. Edelman and Dominion Textile, Canada’s leading textile concern.

Edelman’s office said the investor will not comment on Burlington’s move until he can analyze the agreement. Dominion Textile officials did not immediately return a telephone call requesting comment.

The Edelman-Dominion partnership already holds a 13.4% stake in Burlington and stands to earn more than $80 million on its investment should it tender to the Morgan Stanley group.

When the partnership first disclosed in late April that it had been accumulating Burlington shares, the stock was trading between $53 and $56 a share. A few weeks earlier, on April 1, the stock stood at $46 a share.

An official of the Morgan Stanley group, meanwhile, said it was likely that Burlington would have to sell some assets to help pay for the debt that would be incurred to pay for the buyout.

In a leveraged buyout, a company is purchased with mostly borrowed money that is repaid with funds from the target company’s cash flow or from the sale of assets.