WHX Launches Hostile Bid for Teledyne After Offer Is Rejected : Acquisitions: Parent of Wheeling-Pittsburgh Steel has its eyes on L.A. firm’s $1.9-billion employee pension fund.

WHX, the parent of Wheeling-Pittsburgh Steel Corp., launched a hostile effort Wednesday to buy Teledyne Inc., following an undisclosed $1.2-billion acquisition proposal made last month that was rejected by Teledyne’s board.

New York-based WHX said it was filing under the federal Hart-Scott-Rodino Antitrust Act to buy up to 15% of Los Angeles-based Teledyne and has already acquired 975,000 Teledyne shares, or 1.8% of the outstanding common stock.

Teledyne shares closed at $20.75 in trading Wednesday on the New York Stock Exchange, up $3.625 on news of WHX’s $22-a-share acquisition offer made Nov. 28. WHX’s offer consisted of $11 a share in cash and the balance in convertible preferred shares.

Teledyne Chairman William P. Rutledge rejected the merger offer in a terse letter Monday to WHX Chairman Ronald LaBow, saying that a union of the two companies would result in “no significant value to Teledyne shareholders.� He said all the directors had “no interest in pursuing your proposal.�

LaBow is setting his sights on Teledyne’s $1.9-billion employee pension fund, which is over-funded by about $860 million--a potentially huge asset to offset the cost of a $1.2-billion takeover, according to a source close to the deal.

Wheeling-Pittsburgh employees do not currently have a pension fund, and by tapping into Teledyne’s excess funds to create its own pension fund, the firm could painlessly deal with what has been a troublesome labor issue, the source said. Wheeling-Pittsburgh Steel, the nation’s eighth-largest consolidated steelmaker, emerged from bankruptcy protection in early 1990.

In a recent investment report, the Wall Street investment firm Donaldson Lufkin & Jenrette indicated that a direct attempt to seize the excess assets could raise objections by the Defense Department, whose military contracts contributed much of the money. Donaldson Lufkin & Jenrette is the investment banker to WHX.

But a merger that would fold the excess funds into either an underfunded pension plan or into an entirely new pension fund would largely bypass both Pentagon regulations and punitive federal taxes that apply to terminated pension funds.

A large number of defense firms have huge excesses in their pension funds, because the funds had large investment gains and because huge layoffs have cut the number of employees who will be able to draw against the funds. So far, however, the funds have not become a visible target of corporate raiders.

By acquiring a small stake in Teledyne and filing for clearance to expand its holdings, WHX is signaling that it is prepared for a protracted battle to gain control or a strong minority position on the Teledyne board.

Under Hart-Scott-Rodino, federal regulators have 30 days to review a possible merger for antitrust implications. WHX has asked for expeditious consideration of its filing, indicating that the two firms have few, if any, lines of competing business, a spokeswoman said.

Teledyne does not currently have a “poison pill� takeover defense, Teledyne spokeswoman Rosanne O’Brien said.

The Teledyne board consists of seven members, elected under so-called cumulative voting that allows shareholders to leverage votes by designating ballots for a few directors, rather than casting them for a full slate.

Teledyne founder Henry Singleton owns 13.1% of Teledyne’s shares. In total, Teledyne officers and directors hold 22% of the firm’s 55.4 million outstanding shares.