Chase Corp. Offers $300 Million for Standard Brands Paint Chain
A New Zealand real estate and investment firm Tuesday offered $300 million for Standard Brands Paint, a leading Southern California do-it-yourself home decorator retail chain.
Stuart D. Buchalter, chairman of the 48-year-old retailer, said Standard Brands Paint’s directors would consider the offer from Chase Corp. of New Zealand “in the near future.”
Standard Brands Paint, based in Torrance, is the largest paint retailer in Southern California. Despite its dominant position in the marketplace, the company’s earnings have suffered recently because of competition from Home Club, Home Depot and other discount do-it-yourself chains.
Seth Glew, a Chase Corp. director, said the New Zealand firm wants to acquire Standard Brands Paint because it owns a large portfolio of undervalued real estate. Standard Brands Paint owns more than 90% of its 133 stores, most of which are in prime commercial locations. Glew said the retail chain could make more money by closing some of its larger stores and leasing the properties to other retailers.
“Our experience is in real estate and we see real estate opportunities inside Standard Brands,” Glew said.
Chase Corp. is one of the largest public companies in New Zealand and has real estate holdings in Australia and Great Britain. The company, controlled by 42-year-old New Zealand millionaire Colin Reynolds, earned $75 million for the fiscal year that ended on June 30. Chase Corp. has acquired a 4.8% stake in Standard Brands Paint, at an average cost of $23 per share.
Standard Brands Paint shares rose 87.5 cents Tuesday, closing at $29.50 in composite trading on the New York Stock Exchange as 1.5 million shares, or more than 10% of its outstanding shares, changed hands.
The company’s shares have gained during the past two weeks, as rumors about a possible bid for Standard Brands Paint made the rounds on Wall Street. In May, the company reincorporated in Delaware and adopted certain anti-takeover measures, including a “fair price” amendment that prevents two-tier takeovers.
Ward P. Lindenmayer, an analyst with the San Francisco investment firm of Sutro & Co., said that Chase Corp.’s $28-a-share offer for Standard Brands Paint was inadequate. He said that the retailer’s property was worth between $250 million and $300 million, or at least double its $125 million book value. Lindenmayer said Standard Brands Paint’s stock was worth between $30 and $40 a share.
Founded in 1939, Standard Brands Paint has grown to become the leading do-it-yourself home decorating chain in the West, with 133 stores in nine states, including 55 in Southern California. Much of that growth has taken place since 1981, when Buchalter took charge.
The company’s holdings include paint manufacturing plants, seven art stores and scattered pieces of undeveloped commercial real estate. It earned $15 million on sales of $327 million for the year that ended on Jan. 31, 1987.
Glew said Standard Brands Paint was to consider Chase Corp.’s offer, which consists of $21 cash and $7 in notes, at a regularly scheduled directors meeting Friday. Glew said Standard Brands Paint indicated that it would disclose its decision Monday.
Standard Brands Paint Co. at a Glance
Standard Brands Paint Co. is a major retailer of paints, floor coverings and art materials, specializing in the do-it-yourself market. The company operates 133 home decorating centers in 99 cities in 9 Western states. Based in Torrance, it also manufactures most of the paint it sells.
Year ended Jan. 25 1987 1986 1985 Sales (millions) $327 $338 $315 Net income (millions) 15.0 15.8 20.8
Assets $253 million
Employees 3,600
Shares outstanding 11.1 million
52-week price range $19.375-$29.50
Tuesday close $29.50, up 87.5 cents
