Olson Farms Signs Deal to Sell 30% of Stock to Winn Unit
Olson Farms Inc. of Sherman Oaks Monday reversed a previous decision and signed a tentative agreement to sell a 30% ownership interest to an affiliate of Fullerton-based Winn Enterprises for $7.2 million.
The reversal stemmed from a power struggle for control between the founding family of the company, one of the state’s largest egg distributors, and other directors.
The agreement prompted members of the family of C. Dean Olson, the founder and largest shareholder, to file a petition with a Delaware state court. They asked the court to decide if Olson’s board is legally in control of the company and empowered to sign the agreement with the Winn unit.
Stock Price of $13 Set
Under an agreement announced jointly by Winn’s Anaheim-based subsidiary, Southwest Overthrust Oil & Gas Co., and Olson Farms, Southwest will purchase 552,000 shares of newly issued Olson Farms common stock for $13 per share, according to R. Sam Christiansen, executive vice president of Southwest.
That is the same offer that the company rejected in early May when Olson Farms tentatively agreed to sell the shares for a slightly higher price to C. Dean Olson and two members of his family.
The original Winn offer on May 1 set off a chain of events that led to a conflict between two boards of directors that now claim to be running the company. The 11-member board that approved the sale to Winn is chaired by John W. Buffington. A second, five-member board is chaired by C. Dean Olson, and it claims to have been created by valid consents from a majority of Olson Farms shareholders who oppose the Winn transaction.
On Monday, C. Dean Olson and his daughter, Deanna, filed a petition with the Court of Chancery in Wilmington, Del., asking the court to decide which of the two boards is the valid board, according to Patricia Glaser, C. Dean Olson’s attorney. She said a tentative trial date has been set for June 14.
“We’d prefer that the shareholders decide who is the legitimate board,” Glaser said. “But we can’t get the other side to go to the shareholders, and it takes two to tango.”
The Olson shareholders meeting that had been scheduled for Friday has been postponed until July 15 under a recent amendment to the company’s bylaws. Jonathan M. Berge, executive vice president of Olson, said the meeting was postponed because “we want to know which board is running the company before we hold the meeting.”
Berge said that the offer from C. Dean Olson was rejected, “Because the bank financing terms were unacceptable.”
But dissident Olson family members claim they were not given enough time to raise the money. And Glaser, C. Dean Olson’s attorney, said the sale to Winn is “bad for the company” because it changes the method of accounting from cash to accrual.
On May 1, Winn made a bid to purchase 30% interest in Olson Farms, but Winn called off its offer on May 6 when Olson Farms announced it had agreed to sell to C. Dean Olson. “We had no desire to do anything on an unfriendly basis,” Christiansen said. He said that Olson executives “contacted us” when the C. Dean Olson deal did not go through.
Southwest is a subsidiary of Mountain West Savings & Loan of Salt Lake City, which in turn is owned by Winn. The Winn division is in the process of changing its name from Southwest Overthrust Oil & Gas Co. to Mountain West Equities. “We want to get an awareness that we are not an oil and gas company,” Christiansen said.