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Olson Farms Deal to Sell 30% of Stock Collapses

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Times Staff Writer

A tentative agreement for an affiliate of Anaheim-based Winn Enterprises to buy 30% of Olson Farms of Sherman Oaks for $7.2 million has been called off, Olson Farms said Wednesday.

Officials of Southwest Overthrust Oil and Gas Co., the Winn affiliate, could not be reached for comment. But, according to a statement issued by John Buffington, board chairman of Olson, Southwest said it “needed more time to evaluate and reconsider this entire transaction” for several reasons.

The statement said the companies “may reopen negotiations,” but that Olson is looking for other sources of capital.

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Among the reasons cited for Southwest’s apparent second thoughts about the agreement were a court fight over control of Olson and the ground rules for Olson’s Aug. 23 shareholders’ meeting. Olson Executive Vice President Jonathan Berge said another factor probably was weakness in the egg market, a key business for Olson.

Egg Market ‘in a Downer’

“The egg market has been in a downer, and remains down,” Berge said.

Berge said the court fight in Delaware, where his company is incorporated, has now been resolved. The battle was between two competing boards of directors, and the court ruled in favor of the board elected at the last shareholder meeting, held June 1, 1984.

But the Delaware court also urged that a shareholders’ meeting be held as soon as possible because the last meeting was so long ago, Olson officials said.

A July 22 date of record was set for the next meeting, meaning that shareholders who bought Olson stock after that cannot vote. That apparently contributed to the suspension of Olson’s agreement with Southwest.

Southwest was to get five of nine seats on Olson’s board. But the deal was not consummated by July 22, and Southwest would not have been allowed to vote, Berge said.

Also in Packaging Business

Olson Farms is one of the nation’s largest independent producers and distributors of eggs and egg products. It is also in the plastic packaging business, making cartons for eggs and fast food. Olson employs 1,200 workers overall, including 60 at the firm’s corporate headquarters in Sherman Oaks.

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Buffington said another reason cited by Southwest was the possibility of an appeal of the Delaware court decision. But an appeal seemed unlikely Wednesday. Berge said both sides in the dispute have agreed to back a single, nine-member slate for election to the board at the upcoming stockholders’ meeting, and that the disagreement is over.

“We’ve settled all the problems,” agreed C. Dean Olson, a director whose family controls about 43% of the company’s stock. He said he considers it highly unlikely that the deal with Southwest will be revived.

In his statement, Buffington said: “The parties may reopen negotiations when the new board of directors is in place following the annual stockholders’ meeting in August. However, management is exploring other avenues of obtaining equity and/or debt financing.”

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