Teledyne Rumors : Litton’s Stock Sinks as Talk of Selloff Fizzles

Litton Industries’ stock slipped Thursday as speculation subsided that its largest shareholder, Teledyne Inc., may unload its 27% stake and put Litton into play as a takeover candidate.

Litton stock fell $2.875 per share to close at $103.125 in New York Stock Exchange trading Thursday, after rising $10.50 over the two previous days.

The run-up was triggered in part by rumors that Los Angeles-based Teledyne and its secretive chairman, Henry E. Singleton, may sell some of its stakes in a number of publicly traded companies, including Litton, which has headquarters in Beverly Hills. Such a move may come as part of an effort to realign Teledyne’s portfolio or to take some of the considerable profits it stands to make.

Speculation was fueled by heavy trading this week in two companies in which Teledyne has large stakes, Reichhold Chemicals and Kidde. Reichhold is the target of a hostile takeover bid and Kidde has announced a possible restructuring.

Companies Won’t Comment

A spokesman for publicity-shy Teledyne, a diversified producer of aircraft engines, machine tools and other products, refused to comment Thursday on the rumors. A Litton spokesman refused to comment on whether the diversified electronics and industrial products company was considering any anti-takeover measures.

However, even if Teledyne sells its Litton stake, that would not necessarily put Litton into play, Robert M. Hanisee, director of research at Seidler Amdec Securities in Los Angeles, said.

Singleton is said to be good friends with Litton Chairman Fred W. O’Green and is believed to have a gentleman’s agreement to give Litton first crack at buying back Teledyne’s stake, Hanisee said. With $1 billion in cash and a stock buyback program in progress, Litton has the wherewithal and desire to buy Teledyne’s stake given the opportunity, Hanisee said.

On the other hand, some analysts believe that Litton’s stock is undervalued and that the company could be worth much more than its current market value if it sold its various subsidiaries and distributed the proceeds to shareholders, Hanisee said.

But any unloading by Teledyne of its Litton stake is still just rumor, Hanisee said.

“Nine out of 10 rumors about Teledyne are totally false, a creation of Wall Street’s imagination,” he said.