	borg warner agrees to buyout by merrill lynch firm borg warner bor corp facing an unwanted offer from gaf corp gaf agreed to a billion dlr buyout offer from a company to be formed by merrill lynch capital partners inc borg warner and merrill said yesterday they entered a definitive merger agreement under which a subsidiary of the new company av holdings corp will begin a dlr per share cash tender offer today for mln shares or pct of borg warner common stock the offer will be followed by a merger in which each remaining share will be converted into dlrs cash and dlrs principal amount of av holdings junior subordinated discount debentures as a result of the merger borg warner will become a wholly owned subsidiary of av holdings a borg warner spokeswoman said members of management do not plan to participate in the transaction but they will retain their positions with the company a spokesman for gaf was unavailable for comment gaf holds pct of borg warner s shares gaf had said it would offer dlrs per share borg warner s spokeswoman said the company still plans to sell its financial services unit which includes wells fargo security guards and the chilton corp a credit rating service borg warner has been the focus of takeover speculation for about a year corporate raider irwin jacobs last year proposed a takeover of the firm and until recently held pct of the stock following the gaf offer analysts had calculated breakup values for the company in the low dlrs per share range and speculated an offer would have to be sweetened in its statement borg warner said its board endorsed the merrill offer and it recommended that shareholders tender their shares the board received opinions on the offer from its advisors first boston corp and goldman sachs and co james burke president of merrill lynch capital partners said we are very pleased to have entered into this transaction with borg warner we are looking forward to working with the employees of borg warner and to borg warner maintaining its strong presence in the chicago community merrill lynch will be the dealer manager for the offer which expires at midnight edt may gmt may subject to conditions including the completion of necessary financing arrangements the offer is also subject to a minimum mln shares or pct of the outstanding shares being tendered merrill lynch and certain affiliates have committed to provide mln dlrs in av holdings equity and mln in subordinated financing and forward underwriting commitments merrill lynch said that following discussions with commercial banks it is confident it can obtain the rest of the financing required to complete the transaction the junior subordinated discount debentures to be issued in the merger will carry a pct coupon and will begin paying cash interest after five years the debentures will be redeemable at the company s option for the first six years at pct during the seventh year at pct and after that at pct of the principal amount the junior subordinated discount debentures have a maturity of years and are entitled to a sinking fund commencing in the th year designed to retire pct of the issue before maturity borg warner will also redeem all of its outstanding dlrs cumulative preferred stock series a for dlrs per share holders who wish to participate in the offer must first convert their preferred stock into borg warner common stock the board of borg warner has also taken steps to redeem its poison pill or share purchase rights for five cents per right effective immediately reuter 
