Di Giorgio Will Buy Back 20% of Shares
Di Giorgio Corp. said Tuesday that it plans to buy back nearly 20% of its stock and sell four divisions, including two in Southern California.
The move would refocus the old-line San Francisco company on its food-processing and distribution and building materials businesses.
Di Giorgio, which outlasted a hostile takeover attempt last year, said the restructuring “is designed to strengthen the company and result in enhanced value for all Di Giorgio shareholders.”
The company said it will sell Chatsworth-based Serv-A-Portion, a portion packaging business; Guaranteed Products of City of Industry, an aluminum windows and metal extrusion operation; Di Giorgio International of Turnhout, Belgium, a juice bottling and portion packaging business, and the San Francisco-based real estate development division.
Serv-A-Portion employs about 350 people at its Chatsworth plant while Guaranteed employs about 320 in City of Industry. In all, Di Giorgio has about 4,000 employees.
The four divisions have aggregate annual sales of more than $150 million, a Di Giorgio spokesman said.
The company did not reveal earnings but said the divisions are profitable in the aggregate.
Officers to Hold Shares
Analysts have said that Serv-A-Portion and the aluminum extrusion operation had suffered reverses last year but that the land development operation would probably report narrower losses for 1987 than in the previous year.
Di Giorgio will begin its restructuring by repurchasing up to 1.5 million of its approximately 8.5 million shares at $21 per share.
If Di Giorgio buys back all 1.5 million shares, it will pay $31.5 million.
Di Giorgio noted that no officers or directors plan to tender their shares under the plan.
Peter F. Scott, chairman and chief executive of Di Giorgio, said the restructuring “will improve the company’s financial performance and enhance values for the company’s shareholders.”
Di Giorgio’s stock closed at $19.50 a share on the New York Stock Exchange on Tuesday, down 87.5 cents.
Last year, New York-based Gabelli Group offered to buy the company for $28 per share--$20 in cash and $8 in securities. Di Giorgio rejected the offer, and Gabelli dropped its takeover plans, saying it no longer wanted to take over the company or participate in its management. Gabelli still owns 24.9% of Di Giorgio.
Not a Defense Move
No Gabelli officials could be reached for comment on Di Giorgio’s proposed stock buyback restructuring.
The restructuring is not an anti-takeover device, a Di Giorgio spokesman said, but is part of a longer-term revamping of the company that started in 1984. Since that time, Di Giorgio has sold several divisions and redeemed certain issues of preferred stock and debentures.
For the nine months ended Sept. 30, Di Giorgio reported earnings from continuing operations of $8.1 million on sales of $880 million.
But Di Giorgio had a net loss of $7.7 million for the nine months because the company had to repurchase a $32-million note when a former subsidiary defaulted, resulting in a $16.9-million charge for the period.
