Family Battle : Olsons Agree to Reorganize Egg Company

Olson Industries, one of the nation’s biggest distributors of eggs, announced Tuesday that its largest shareholder has agreed to give up his family’s $5.8-million stake in the Sherman Oaks-based company in exchange for most of its egg farms and processing plants.

The transaction would remake the slumping company into a 35% smaller enterprise dominated by a profitable plastic packaging division. The deal stems from the proposed settlement of a legal battle between the brothers who founded Olson Industries more than 50 years ago: C. Dean Olson, 78, whose family holds the company’s largest interest with a 37% stake, and 79-year-old H. Glenn Olson.

Under the agreement, Dean Olson and his family would trade all of their stock for egg operations in Arizona, California, Idaho, Hawaii, Utah and Washington. Those egg operations will bring in $75 million of the $215 million in sales projected this year for Olson Industries and its affiliates, said John W. Buffington, chairman and chief executive of the company.

Executive Vice President Jonathan M. Berge said the transaction, which is subject to board approval, would give Glenn Olson a controlling interest. He and his son, Richard Olson, now hold a stake of nearly 12%.

Olson Industries still would own egg farms in Arkansas, New Mexico and Texas after the exchange. It also would keep its 50% interest in H-O Foods, an affiliated company in Nevada that distributes processed eggs. Various other investors, not including Glenn Olson, have the other 50%.

Olson Industries’ biggest business, however, would be Dolco Packaging Corp., a Sherman Oaks subsidiary that manufactures egg cartons and other foam plastic products.

Low egg prices have hit Olson Industries hard in recent years. Since 1980, egg sales have accounted for about two-thirds of the sales but only about half of the profits of the company and its affiliates.

For the nine months ended Sept. 30, Olson Industries and its affiliates posted a loss of $415,000, compared to a profit of $1.3 million during the like period last year.

The company has responded by diversifying into plastics and food-service operations.

Scott Gillespie, president of Drake Capital Securities in Los Angeles, said Olson Industries may be strengthened by divesting the egg farms and processing plants to Dean Olson.

“They (Olson Industries) have greater control of their destiny,” he said. “The egg business is too risky, too commodity driven.”

However, Dean Olson said that he would revitalize his egg operations. “I have great confidence in the egg industry,” he said.

Gillespie added: “Dean’s roots are in eggs. People don’t always do things for the bottom line.”

The legal dispute between the Olsons began in February, when Glenn Olson filed a suit in Los Angeles Superior Court alleging that his brother had reneged on a deal to divide their jointly held assets. The suit also accused Dean Olson of improperly diverting to his own use funds from an egg farm owned by both brothers.

Dean Olson responded by filing a countersuit making the same accusations against Glenn Olson.

The case was settled Friday, paving the way for the proposed restructuring of Olson Industries. It requires Dean Olson and his family to turn in their 400,000 shares of stock. The stock closed at $14.50 a share in over-the-counter trading Tuesday.

The settlement also calls on Dean Olson and his daughter, Deanna L. Placey, to resign from the board at its meeting Dec. 4.