Last-Minute Bidding Nets Smith $61.5 Million for Houston Unit

LOS ANGELES — A mere 10 minutes of intense bidding in bankruptcy court late Friday forced Cameron Iron Works Inc. to pay $61.5 million--$10.5 million more than it had planned--to acquire Smith International Inc.’s McEvoy-Willis division.

“I’m not at all pleased about paying the extra $10.5 million, but I’m pleased with the acquisition,” said Philip Burguieres, chairman, president and chief executive officer of Houston-based Cameron. He declined to comment on Cameron’s plans for McEvoy-Willis’ 700 Houston-area employees.

After the sale, Burguieres said he planned to send Cooper Industries Inc. a dozen black roses for starting the bidding war over the largest asset offered for sale by Smith, which is reorganizing under federal bankruptcy laws.

Cameron previously agreed to buy the McEvoy-Willis division for $51 million. The papers were all drawn up when Cooper unexpectedly entered a $55 million bid on Sept. 8.

Cameron, with about 5,000 employees, is a major manufacturer of oil well equipment. For the year ended June 30, it posted revenues of $500 million.

The McEvoy-Willis sale further enhances Smith International’s plans to emerge from Chapter 11 bankruptcy proceedings by the end of the year.

Smith filed for protection from its creditors in March, 1986, shortly after a Los Angeles federal court ordered the Newport Beach oil services company to pay Hughes Tool Co. $205 million in damages stemming from a patent infringement case. The settlement was later reduced to $95 million when Baker International Inc. merged with Hughes.

“I have mixed emotions,” said Loren Carroll, Smith’s chief financial officer, after the sale was approved by U.S. Bankruptcy Judge James Dooley. “It’s great from a dollars-and-cents standpoint, but McEvoy has been a great division with excellent people, and we are going to miss them.”

Carroll said the division generated about $95 million in sales last year, or about 24% of Smith’s total revenue. The sale is expected to be completed by Sept. 30.

Carroll said Smith plans to use the $61.5 million to pay off various debts when it emerges from bankruptcy, including $8.5 million in notes held by foreign lenders.

After losing the bidding war, waged by two soft-spoken attorneys, Cooper Industries officials expressed no regret over the outcome.

“We had a limit,” said Dewain K. Cross, senior vice president of finance for the Houston company. “We had a number that made sense to us. Now we are on to something else.”

Cooper is a diversified manufacturing company with 1986 revenues of $3 billion.