Belzbergs End Effort to Take Over Potlatch : Canadian Family Sells Stake Back to Company
The wealthy Belzberg family of Canada on Tuesday abandoned its bid to take over Potlatch Corp. by selling its stake back to the San Francisco-based forest products company.
Potlatch said it paid $43 a share, or $46.7 million, for the 1.09 million shares and options to buy Potlatch shares owned by First City Financial, a Vancouver-based company controlled by the Belzbergs. First City agreed not to buy any Potlatch stock or to participate in a takeover of Potlatch for five years.
The purchase from First City was part of a 2.4-million-share buying spree that Potlatch embarked on Monday morning. In all, Potlatch paid $101 million for the shares, or an average price of $42.75 per share.
Potlatch on Monday announced that it would buy up to 3.1 million shares, or 20%, of the company’s own stock in an attempt to thwart the First City takeover bid.
Weighted Voting
First City earlier had proposed buying all of the common stock of Potlatch for $45 a share, or $692.5 million, conditioned on Potlatch withdrawing an anti-takeover, “time-phased voting” plan that, if approved by shareholders on Dec. 12, would give long-term shareholders more votes per share than would be given to short-term shareholders.
Potlatch’s board rejected the offer Monday and reaffirmed its intention to hold the special shareholders meeting.
Richard B. Madden, Potlatch chairman and chief executive, said the company’s stock repurchase plan, “by allowing stockholders with short-term goals to sell out, frustrated the efforts of First City to acquire control of the company at a price the Potlatch board felt was inadequate and at a time the board determined was a poor one to sell the company.”
First City offered its 7.1% stake Monday, after Potlatch announced its stock buy-back, because the company decided that the repurchase program and Potlatch’s other statements “had materially changed the dynamics of the situation,” First City said in a filing with the Securities and Exchange Commission. First City will record a pretax gain of $8.7 million on the transaction, a company spokeswoman said.
As part of the agreement to sell its stock, First City said it will drop a lawsuit to block the anti-takeover amendment. Potlatch agreed to pay First City $990,000 to cover expenses that it incurred in the takeover offer.
Analysts labeled First City’s run at Potlatch as “greenmail.”
“They never wanted the company,” said Chad E. Brown, an analyst with Kidder, Peabody in New York. First City was more interested in a quick gain either through a stock buy-back or by putting Potlatch into play as a takeover target, he said.
The First City spokeswoman declined to comment on analyst statements.
