Estimates of Irvine Co. Worth Ranged as High as $1.6 Billion in 1982, Bren Testifies

BLOOMFIELD HILLS, Mich. — Irvine Co. Chairman Donald L. Bren testified Thursday that estimates of the company’s worth ranged as high as $1.6 billion in 1982, far more than the $1-billion valuation on which he based his 1983 buyout of the land development firm.

Under questioning in a Michigan state court, Bren conceded that Irvine Co. shareholders discussed a possible offer of as much as $1.6 billion for the company from a potential foreign buyer in mid-1982.

That was less than a year before Bren, who then owned 34% of the Irvine Co., offered in April, 1983, to buy out other shareholders based on a $1-billion valuation of the company.

Later that year, Bren bought a controlling interest in the company, and its value at the time is the key issue in a legal battle between Bren and Irvine Co. heiress Joan Irvine Smith.

Smith contends that the company was worth $3 billion in 1983 and wants $330 million for the 11% interest that she and her mother, Athalie Clark, held before Bren’s buyout.

With interest, Smith says their stake is now worth $500 million. Bren initially offered to pay Smith and her mother $110 million, but he since has lowered the offer to $88 million.

During a lengthy trial, now entering its fourth month, lawyers for Smith have attempted to characterize Bren as having schemed to acquire control of the huge Orange County development firm for less than it was actually worth.

In his testimony, Bren has insisted that he paid the other owners a premium price for their shares.

On Thursday, however, Smith’s lawyers introduced memos and other documents that they said showed that Bren believed that the company might have been worth as much as $1.6 billion in mid-1982.

In the months before the buyout, Bren whittled the price down by creating “an orchestrated climate designed to soften up other shareholders” to accept a lower price, said Howard Friedman, Smith’s principal attorney.

Among the documents Friedman produced Thursday were handwritten notes by Bren. Friedman said the notes were penned in June, 1982, and indicated that Bren considered the company to be worth $1 billion to $1.6 billion.

Questioned about the documents, Bren testified that the figures represented only a rough estimate of the company’s value as he began contemplating a buyout proposal.

Bren also acknowledged that in 1982 he learned that Irvine Co. director Herbert Allen had discussed the possible purchase of the company by unidentified foreign investors at a price of $1.4 billion to $1.6 billion.