Chesebrough-Pond's Inc.--fresh from fighting off a takeover bid--will acquire ailing Stauffer Chemical Co., based in Westport, Conn., in a deal worth $1.25 billion, the companies said Tuesday.
A prepared statement said the boards of directors of both companies unanimously approved the acquisition. Terms call for Chesebrough to offer $28 a share for Stauffer's common stock.
The tender offer, expected to take effect Feb. 20 and last 20 days, stipulates that Chesebrough acquire 50% of Stauffer's outstanding shares on a fully diluted basis.
Under terms of the deal, Chesebrough will purchase any remaining shares for $28. Chesebrough has an option to purchase about 8 million shares of newly issued common stock.
The deal comes after two quarters of poor results for Stauffer. The chemical company was forced to restate its third-quarter earnings after 1982 results were challenged by a Securities and Exchange Commission suit. The SEC charged that the company had shifted some 1983 sales backward into 1982 to overstate 1982 earnings by $31 million.
In settling the suit, Stauffer agreed to revise its third-quarter 1984 profit down 22% to $11 million from the originally stated $14.1 million. The company revised its third-quarter sales downward to $377 million from $381 million.
In addition, Stauffer reported a $13-million charge to cover anticipated payments to the Internal Revenue Service. The IRS has been investigating the company's accounting practices between 1974 and 1982. These include the treatment of depletion and royalties.
In trading on the New York Stock Exchange, Stauffer led the active list, jumping $5.375 a share to $27 on turnover of more than 8.2 million shares. Chesebrough tumbled $3.875 to $33.50.
Stauffer has also been troubled by management shuffling. Kenneth E. Davis, vice president, resigned on Oct. 9, 1984, after only four months in the position. He had been with the company since 1966.
Stauffer Chairman W. B. Morley said Davis, 48, had stepped down "to pursue other interests." But analysts said it looked more like a lack of confidence in the company's direction on the part of top executives.
Despite these problems, Chesebrough spokesman Ronald S. Ziemba called Stauffer a solid company strong on innovation.
"The single most important factor for us was their substantial research capability," he said. "Some of our consumer products can benefit from that research."
Ziemba said Stauffer would benefit from Chesebrough's marketing strength. "I think Stauffer would be the first to say they can use that expertise in expanding their product base," he said.
Chesebrough came through a takeover attempt by financier Carl Icahn, who is now bidding for Phillips Petroleum. Last August, the company paid Icahn $68.6 million for 1.8 million shares of its own stock. Ziemba said the company did not pay a premium when it repurchased the 1.8 million shares from Icahn at the previous day's close of $38.125 a share.
Chesebrough-Pond's is a diversified worldwide manufacturer of branded consumer products.