Henley Group May Be Barking Up Right Tree

The newly formed Fisher Scientific Group’s sales force recently ended a dinner meeting at a Florida resort with a vaudeville skit that unveiled Henley Group’s unofficial corporate emblem: a blue T-shirt emblazoned with a mean-looking bulldog and the epithet, “Dingman’s Dogs--We Mean Business.”

Although analysts have suggested that Henley’s diverse and largely unprofitable collection of Allied-Signal spinoffs includes some canines, during an interview last week, Henley Chairman Michael Dingman suggested that “One man’s dog is another’s blooming flower.”

And Dingman--who proudly displays one of the T-shirts in his La Jolla office--also suggested that a pack of dogs is stronger than a lone dog.

If Henley’s recent public offering was an indication, Dingman’s Dogs are barking up the right tree.

In what was described by industry analysts as the largest initial public offering in history, Henley raised $1.3 billion, more than six times the company’s initial goal.

The offering succeeded even though Henley would have reported a $26.8 million pro forma loss in 1985 on $3.2 billion in sales.

With the exception of a handful of what Dingman described as “amateur” investors, the Henley offering rush was generated by professional investment firms that, with little prompting, rushed to participate in what Dingman has repeatedly described as an “assets play” that will “build shareholder value in some non-traditional ways.”

That will be done, Dingman said, by using Henley’s cash and an as-yet unfigured line of credit in some non-traditional ways.

Henley might, for example, use some of its cash to buy a 50% interest in a large ($10 billion in annual sales) company, or spin off non-performing businesses to competitors.

Or, as Henley reorganizes, it will spin off partial ownership of the resulting businesses--such as Fisher Scientific Group--and offer shareholders an opportunity to trade their Henley stock for equity in the newly formed companies.

In a fashion, Dingman’s game plan borrows from the strategies that fuel leveraged buy outs and the asset plays initiated by corporate raiders such as Carl Icahn. Dingman, however, believes Henley’s buying and selling will benefit both Henley managers and their shareholders.

Investors got a peek last week at Dingman’s vision of the future when Henley reshuffled its deck of companies to form Fisher Scientific Group, a scientific and medical products company with $1 billion in annual revenues.

(The new subsidiary, based in the former Signal Cos. office building in La Jolla that Henley now owns, blends Fisher Scientific Inc. and Instrumentation Labs--inherited from Allied-Signal--with the newly acquired Imed and Barrett, a Sacramento-based electronic information management company in which Henley recently invested.)

The success of Fisher Scientific could well hinge on the leadership of Henley board member Richard Cramer, who founded, operated and later sold Ivac and Imed, a pair of San Diego-based intravenous device companies.

Cramer joined Henley’s board of directors last winter after accompanying Dingman, his next-door neighbor in La Jolla, on a tour of the Fisher Scientific and Instrumentation Labs properties that Henley inherited from Allied-Signal.

Although Cramer initially agreed to help Dingman assign values to the two medical and scientific instrument companies, he signed on as chairman and chief executive of Fisher Scientific Group after Henley purchased Imed from Warner-Lambert Co. for $165 million.

Dingman credited Cramer with attracting Imed co-founder Jon A. Jenkins and former Imed executives E. Linwood Johnson and Kevin P. Monaghan.

“The single most important aspect of our business is people,” Dingman said. “People with the ability to manage its assets, to . . . build values for the shareholders.”

Although Henley is a new company, its corporate offices in La Jolla and New York are filled with executives who worked with Dingman at both Wheelabrator-Frye and Signal. That collection of managerial talent prompted one industry analyst to suggest that “Dingman and his old cast have been reincarnated and are embarking on another Star Trek adventure.”

Dingman chuckles at the comparison but acknowledges that the analyst isn’t too far off base.

“Interest in Henley has been sustained by the fact that (Henley’s managers) have done it all before,” Dingman said. “They’re looking at all of the things we’ve created and are waiting to see what a Henley does.”