Gillette Says SEC Is Probing Stock Deals Prior to Revlon Bid
Gillette Co. said Thursday that it has been told that the Securities and Exchange Commission has begun a preliminary inquiry into the purchase of large amounts of Gillette stock just before Revlon Group’s first takeover bid.
David Fausch, a spokesman for the Boston-based maker of razors and cosmetics, said a letter dated Sept. 11 informed the company that the SEC was looking into purchases before the Nov. 14 bid last year.
“All we have is a letter,” Fausch said. “We don’t know what the SEC is doing.”
Fausch added: “It’s not unusual, when there’s a possible merger acquisition, that there will be a look by the SEC and the stock exchanges at the trading in the stock. Clearly, in the early parts of November, volume in Gillette stock was extremely high.”
The SEC inquiry follows the start of a New York Stock Exchange investigation into trading of Gillette stock by several companies before last Nov. 14.
Calls to the SEC went unanswered. The New York Stock Exchange would not comment on the reports.
The Sept. 11 letter to Gillette from Robert Little, a lawyer in the SEC’s enforcement division, was the first indication of the SEC inquiry. A preliminary inquiry can become a full, formal investigation.
Gillette has been fighting takeover attempts by Revlon for nearly a year. Revlon, headed by Ronald O. Perelman, has made three offers, but Gillette management rejected them all.
According to the Boston Globe, the SEC is looking into trading of Gillette stock during the first two weeks of last November, when buyers got nearly 30% of Gillette at steadily increasing prices.
Revlon bought 13.9% of the stock and on Nov. 14 offered to buy Gillette for $65 a share.
The Globe said it was told by an unidentified source in the financial community that one of the firms the SEC is looking at is Bear, Stearns & Co., which sold Revlon 2.7 million shares of Gillette on Nov. 13.
Calls to Bear Stearns on Thursday with request for comment were not returned.
Gillette rejected Revlon’s offer and began negotiations with Ralston Purina to become a “white knight” to block Revlon’s bid.
Revlon then agreed to sell back to Gillette the 13.9% of Gillette stock it held and not to make another bid for 10 years.
