French Group May Fight for More Seats on Syncor Board

A French group that owns nearly 14% of Syncor International’s stock is considering a proxy fight to double the number of seats it holds on Syncor’s board of directors, according to documents filed with the U.S. Securities and Exchange Commission.

The French group, Compagnie Oris Industrie, is Syncor’s largest shareholder and controls two of the nine seats on Syncor’s board of directors. In its SEC filing last month, Compagnie Oris reported that it wants to increase its influence and possibly change management at Syncor, which is headquartered in Chatsworth and supplies specialty pharmaceuticals to hospitals.

Syncor Chairman Monty Fu said Monday that he spoke to the French group’s two board members in New York last week and now believes the French will drop the request for more board seats.

“I explained that it is not in the best interests of shareholders and the company at this time to go through with this exercise. We all agreed the company has a good future,” Fu said.

Unhappy With Performance

But Charles F. Panneciere, an executive with Compagnie Oris Industrie and one of the men the French want to add to Syncor’s board of directors, said Monday in a telephone interview from France that his group is very unhappy with Syncor’s performance and that a proxy fight is possible.

In a proxy fight, a group solicits votes from shareholders for its own slate of directors. The French group said in its SEC filing that it plans to nominate two of its employees, Panneciere and Francois Bernardeau, as directors at Syncor’s annual shareholders’ meeting on Oct. 27.

Syncor supplies radiopharmaceuticals that are injected into patients so that doctors, using special medical equipment such as gamma cameras, can scan the patient’s internal organs.

Panneciere said the pretax profit margin for a distributor like Syncor should be about 8% of sales, or about $8 million based on the company’s sales of $98.3 million in the fiscal year ended May 31.

Pretax Profit Margin

However, Syncor’s actual pretax profit margin was $4.2 million, or slightly more than 4% of sales. Syncor’s net income in the fiscal year rose 42% to $2.35 million, although $979,000 of the profit came from tax benefits.

Fu said he agrees that profits should be higher and blames the company’s performance on increased competition.

Panneciere also said the French group is very unhappy with the performance of Syncor’s stock. Syncor closed at $5.75 Monday. The company’s stock was as high as $16.75 in 1983.

“The stock value is not what any shareholder could be happy with,” Panneciere said. “Our position is that we are the largest single shareholder and that we represent all shareholders.”

During a July meeting in Chatsworth, Syncor’s board rejected the French request for two additional seats now held by independent directors. Fu said that he believes it is better to have independent directors, or those who are not employees or major owners of the company.

More Seats Not Justified

“The 14% they own is not enough to justify having more than two seats on our board,” Fu said.

Fu said that if the French group controlled four of Syncor’s nine board seats, he believes it would have effective control of the company because another board member, Syncor President Henry-Michel Bouillet, is a former employee of the French group and remains closely allied with it.

Fu noted that Bouillet supported the French group’s request in July for more board seats.

Panneciere said Bouillet, who could not be reached for comment, is a former employee but is independent from the group.

“We do not have any link with Mr. Bouillet whatsoever. We happen to speak the same language, but that’s the only common point,” Panneciere said.

Nuclear Medicine Company

Compagnie Oris Industrie is a for-profit nuclear medicine company owned by the Commissariat a l’Energie Atomique, a huge French government agency that directs France’s nuclear projects. Stock in Compagnie Oris Industrie is scheduled to be offered publicly in France in 1990, Panneciere said.

The French company first became involved with Syncor in 1983 through a $24-million investment and now owns 1.5 million of Syncor’s 11.1 million shares.

Fu and his family own about 13% of the stock. Wellington Management, an investment firm that manages a group of mutual funds in Boston, owns about 10% of Syncor’s stock through three separate funds.