GAF &lt;GAF> SEEN RAISING BORG-WARNER &lt;BOR> BID
  GAF Corp, set on acquiring Borg-Warner
  Corp's valuable plastics business, is believed by analysts to
  be preparing an increased offer for the Chicago-based company.
       Yesterday, Borg-Warner said it agreed to be acquired for
  4.23 billion dlrs by a company to be formed by Merrill Lynch
  Capital Partners. Merrill offered 48.50 dlrs cash per share for
  89 pct of Borg-Warner's common stock, and a package of cash and
  securities for the balance.
      Borg-Warner stock rose 1-3/8 to 49-5/8.
      "I think it's (the stock price) telling us GAF is coming in
  with another bid," said one analyst, who values the company at
  51 or 52 dlrs per share.
      GAF has offered 46 dlrs per share. It holds 19.9 pct of
  Borg-Warner's stock.
      "You're in a cat and mouse game on how you're going to up
  the price. Obviously, nobody wants to pay more than you have
  to. I think GAF is looking at the company the way we're looking
  at it - that it's worth more," Pershing and Co analyst Richard
  Henderson said.
      Henderson estimated it is worth abouth 55 dlrs per share.
      GAF has only said it was reviewing the situation. Merrill
  Lynch officials did not return phone calls.
      Analysts have said they believe GAF Chairman Samuel Heyman
  sought Borg-Warner because of its chemicals and plastics
  business. The rigid plastics are used in such things as
  telephones, computer terminals, and appliances.
      "Where the heck can you buy a world class chemical
  operation these days," said Henderson.
      "He's (Heyman's) got the bucks. He's a heavy hitter, and he
  does not like to get pushed around," said Henderson.
      GAF, a roofing and chemicals concern, attempted a takeover
  of the much larger Union Carbide Corp two years ago. While GAF
  did not win the company, it made a substantial gain on its
  investment in Carbide.
      Analysts said GAF already has a large profit built into its
  Borg-Warner holdings. They said even if GAF raises its offer
  and does not succeed, a higher bid from another company would
  give GAF millions of dollars in profits on its stock.
      "It's a win-win situation," said one analyst.
      One analyst speculated an offer from GAF would be
  forthcoming shortly.
      "I think we are finally down to the final paragraph in this
  book," he said.
      Borg-Warner's other businesses include automotive parts,
  protective services, which includes Wells Fargo security
  guards, and Chilton Corp, a credit rating service.
      Charles Rose, an Oppenheimer and Co analyst who follows
  GAF, said if GAF were to sell into the Merrill Lynch offer, it
  would realize about 125 mln dlrs net profit, or about 3.50 per
  share.
      "I think there's a probability he goes up in price," said
  Rose.
      Rose said, however, he could not really predict what Heyman
  would do. "Sam's a low-risk, high-return player."
      "Is he trying to build a major industrial chemical
  enterprise, or is he trying to be an investment bank," Rose
  said.
      Analysts said Borg-Warner's chemical business would add
  earnings momentum to GAF. "I worked out that paying as much as
  50 dlrs per share would still be additive to GAF in time, if
  they sold off most of the non-chemical facilities," said John
  Henry of E.F. Hutton.
      Borg-Warner's chemical and plastics business provided 1986
  operating profits of 153.3 mln dlrs on revenues of 1.04 billion
  dlrs. Total operating profits were 349.7 mln dlrs, and net
  earnings were 206.3 mln dlrs for 1986.
      "The Borg chemical business is great," said Rose, adding
  its only U.S. competitors are Monsanto Co &lt;MCT> and Dow
  Chemical Co &lt;DOW>.
  

