L.B. Foster mulls next step in Portec merger

L.B. Foster Co. said today it is reviewing an Allegheny County Court's preliminary injunction holding up its merger with Portec Rail Products Inc., a Fox Chapel-based rail products provider.

"We will sit down internally with legal counsel and advisers and figure out the next step," David J. Russo, chief financial officer for the Green Tree-based supplier to the rail, construction and energy industries, told analysts today in a conference call.

Portec shareholders filed two class action lawsuits against Portec's board of directors on Feb. 24 alleging that it had undervalued the company when it agreed to sell Portec to L.B. Foster for $112.4 million, or $11.71 a share.

They asked the court to stop the merger or award them damages if the deal is completed.

L.B. Foster shares traded this afternoon at $31.10, down $1.23. Portec shares traded at $11.72, up 11 cents.

L.B. Foster CEO Stanley Hasselbusch said today he still believes that the merger is good and makes Foster stronger. Adding Portec's rail products will make Foster a "premier global provider of products and services below the rail."

The merger has been under review by the Department of Justice and Foster gave anti-trust investigators the information they requested on March 22. Hasselbusch said. Foster had extended its offer to April 26, from March 25.

Foster also today released a first-quarter earnings report that showed net income dropped 42 percent to $1.75 million, or 17 cents a share, from $3.0 million, or 29 cents a share from a year ago. Sales fell 19 percent to $82.0 million, compared to $101.6 million a year ago.

Hasselbusch said that sales were down in the first quarter in all segments. The company's backlog is substantially higher at the end of this quarter than a year ago.

The CEO did say that the sales of concrete rail ties were up 41 percent, thanks to federal stimulus funding.