Directors Put Zellerbach Up for Sale : Urge Rejection of Goldsmith Bid; Will Spin Off Timberland
Crown Zellerbach’s directors put up a “for sale” sign Thursday, offering to sell the forest-products giant for $1.63 billion, or $60 a share.
At the same time, the board said it plans to spin off interests in its timberland to shareholders and urged them to reject Anglo-French financier Sir James Goldsmith’s $42.50-a-share tender offer for a majority of the company’s shares.
Meanwhile, New York arbitrageur Ivan F. Boesky said he has acquired 2 million shares of Zellerbach common, or 7.4% of the company’s outstanding shares.
In a statement filed Thursday with the Securities and Exchange Commission, Boesky said he paid nearly $83 million, or an average of $40.93 a share, for the stake.
‘Stratospheric’ Price
Boesky frequently buys stakes of takeover targets, hoping to sell the shares at a higher price.
The $60-a-share price asked by Zellerbach’s board is “clearly stratospheric,” a source close to Zellerbach’s board acknowledged, adding that the figure was floated “for negotiating purposes.”
Analysts have estimated the company’s value at about $50 a share.
In New York Stock Exchange trading Thursday, Zellerbach shares rose $1.375 to close at $43.25 on a volume of 610,600 shares.
The directors’ decision to put a sale price on the company was a tacit acknowledgment of the widely held Wall Street view that the 115-year-old company, a fixture of the West Coast business community, is about to lose its independence. The statement was designed to cement shareholders’ allegiance in the coming proxy fight against Goldsmith.
“We’re telling shareholders that, if we can’t find a ‘white knight,’ we’ll liquidate the company,” the source close to the board said. A white knight, in takeover parlance, is a friendly acquirer who steps in to rescue a company from a corporate raider.
2 Million Acres of Timberland
“By spinning off the timber, we’ll begin the process of liquidating the company for the benefit of the shareholder,” the source continued. “Goldsmith would liquidate the company for his own benefit.”
Under the Zellerbach plan, some or all of the company’s 2 million acres of timberland would be placed in a trust whose units would be distributed to the company’s shareholders. Zellerbach said the spinoff was part of a “major restructuring” that would be completed “within the next year.”
Goldsmith hasn’t said what he would do with Zellerbach if his bid succeeds. However, Goldsmith dismantled Diamond International, the last forest-products company that he acquired, at a profit of about $500 million.
As expected, Zellerbach’s directors also refused Goldsmith’s demand that they redeem the “poison pill” shareholder rights that they issued last year. The rights could add to the cost of a hostile takeover by permitting Zellerbach holders to buy two shares of the surviving company for the price of one.
“The board believes these rights continue to be an important means of assuring that all Crown Zellerbach shareholders are treated fairly and receive full value for their Crown Zellerbach stock,” the company said.
Zellerbach added, however, that it would redeem the rights if it got a cash offer of $60 a share for all outstanding shares, “or in connection with any offer accepted by the board.”
The company said it is prepared to work “with any responsible person,” including Goldsmith. However, to secure Zellerbach’s “full cooperation,” the board said that bidders must refrain from making an offer to shareholders that isn’t approved by Zellerbach’s board--unless the offer is at least $60 a share.
