Zellerbach Board Meets to Discuss Goldsmith’s Bid

Crown Zellerbach directors met Wednesday to discuss a proposed takeover attempt by British industrialist Sir James Goldsmith that the company has strongly opposed since it was first announced in December.

Goldsmith has offered to pay $42.50 a share for a majority of Zellerbach’s 27.2 million outstanding shares. But he has also said that deal doesn’t hold unless the company drops a complex anti-takeover plan designed specifically to thwart his efforts.

If Zellerbach does not drop its anti-takeover efforts, Goldsmith has said he may buy more stock, but he would not commit himself to further purchases or his $42.50 a share offer.

Since Goldsmith first announced his plans for a tender offer in December, Zellerbach has put into place an unusual deterrent that would allow stockholders to sell their shares to a new owner at twice the price they paid for them. The move was designed to increase the cost of a takeover and applies to anyone who owns 20% of Zellerbach’s stock or seeks at least 30%.

Goldsmith currently owns at least 8.5% of Zellerbach’s stock.

The two sides are already digging in for an anticipated proxy battle at Zellerbach’s annual meeting May 9. Goldsmith has said he will seek representation on the board of the paper and forest products company with the intention of revoking the anti-takeover measures. Goldsmith had given the company until this past Monday to drop its anti-takeover measures, but that deadline passed without comment from Zellerbach.

Shareholders have not yet voted on the attempted takeover by Goldsmith, but two of them did file a lawsuit in Chicago earlier this week against Zellerbach, charging that the deterrent to Goldsmith’s offer keeps them from receiving a premium for their shares.

Mark S. Rogers, a paper and forest products analyst with Dean Witter Reynolds Inc. in New York, said that Zellerbach may be worth more than Goldsmith is offering.

“On a buy-out basis, the . . . stock is worth in the $50 to $55 range,” considering the company’s sizeable assets, Rogers said. “I think the $42.50 bid of Goldsmith’s is probably too low.”