Has Ron Perelman Spotted A Pearl?by
If you're a Ron Perelman fan who wants to get in on one of his stock plays, you may want to ape what some pros are doing: snapping up the shares of Abex (ABE), now at 93/4. This little-known maker of flight- and engine-control systems and hydraulic pumps for aircraft is being swallowed up by Perelman's MacAndrews & Forbes.
Under an agreement, Abex is merging with two other Perelman businesses: Consolidated Cigar, America's largest stogie maker, and Mafco Worldwide, the leading producer of licorice extract, a flavoring agent used in tobacco and confectionery products. The combined company will be called Mafco Consolidated Group, which will be 80%-owned by Perelman.
As part of the merger arrangement, for each share of Abex, shareholders will receive three securities: one share of Abex' aerospace company, which will be renamed Power Control Technologies and will trade on the Big Board; one quarter of a share of common stock in Mafco Consolidated, also on the Big Board; and one "value support right," which is designed to ensure that within a stated period the combined market value of the package received will be at least $10.
"Even before Perelman is halfway to where he wants to take Mafco, the combined value of the stocks should be twice the current price of Abex," says the head of an investment-and-research boutique in San Francisco who started accumulating Abex shares when it was at 7. Abex has some $200 million in cash, besides the aerospace unit's assets.
This investment pro believes Perelman wants to sell the aerospace division as quickly as possible. He estimates this operation alone is worth "north of 7 a share."
"Buying Abex shares at this point is a smart bet on Perelman," says Stuart Rudick of Mindful Partners in San Francisco, who likes to play Perelman's forays into different stocks. "His strategic moves into Revlon, Coleman, and Marvel Entertainment, to name some of them, have made me big bucks," says Rudick.
Rudick believes Perelman will use Abex as a vehicle to make additional lucrative acquisitions, possibly including a casino in either Atlantic City or Las Vegas.