VLI to Lay Off Most of Its Workers, Close Irvine Plant
Most of VLI Corp.’s 137 employees will be laid off and the Irvine contraceptive sponge maker will close its local plant sometime next year, after the company is acquired by American Home Products Corp., Thomas Berryman, VLI’s chief financial officer, said Monday.
Berryman said manufacturing will be moved by mid-1988 from a VLI-owned facility in Irvine to American Home’s Whitehall Laboratories division in Hammonton, N.J.
He said some employees might be offered positions with American Home, “but how many will get offers and how many would be willing to relocate, I don’t know. . . . I know that I don’t plan to leave Southern California.”
Neither VLI President Mary George nor Chairman Robert Elliott expect to stay with American Home after a short transition period, the two said in earlier interviews.
Berryman described American Home’s plans for the facility as “uncertain.” American Home officials declined Monday to discuss the futures of the plant or VLI’s employees.
On Nov. 4, VLI accepted a reduced, $78-million acquisition offer from American Home after the collapse of an earlier American Home offer to pay $87.5 million for VLI’s shares. The lower offer was made amid uncertainty over future patent protection of VLI’s main product, the Today brand contraceptive sponge.
The initial acquisition offer, made after VLI officials failed to make a required $150 patent renewal fee and lost certain design protections for the sponge, was conditioned on reinstatement of the patent.
A petition to reinstate the patent was denied in September, but VLI has appealed.
The renegotiated deal is not contingent on VLI regaining the patent but does require that VLI pay American Home a $2-million fee if any other snags spoil the merger.
For instance, George said her company would be required to pay the fee if another company buys VLI’s shares in the open market before American Home holds a majority interest in the company. American Home is scheduled to launch its tender offer for VLI’s shares today.
Analysts said the takeover price of $6.25 per share was a good deal for both companies but, they noted, the price is considerably less than what VLI’s original investors anticipated. The company went public in September, 1983, at $13 per share, and its stock soared to an all-time high of $26.75 per share within two months.
George acknowledged for the first time Monday that American Home has been trying to purchase VLI for more than a year. Previously, VLI officials had declined to name the suitor in a takeover offer made November, 1986. That offer crumbled because of potential product liability issues that since have been resolved.
