Shearson Role in Koppers Bid Defended
Shearson Lehman Hutton Inc. on Monday defended its role in the hostile takeover attempt of Koppers Co. against senators’ claims that the American Express Co. subsidiary had crossed the line between banking and commerce.
“From an American Express Co. viewpoint, not only do we think this to be a Shearson transaction and activity in the normal course of its business, but we also view the uproar by some allies of Koppers as ill-informed, provocative and ill-advised,” Harry L. Freeman, executive vice president of parent company American Express, told the Senate Banking Committee.
He said it was ill-informed because of the “continued erroneous assertion that somehow Shearson, rather than Beazer PLC, is trying to acquire Koppers, which is simply not true and strikes the management of American Express Co. as a bizarre allegation.”
Beazer is a British materials and construction concern. It led a group that made an unsolicited cash tender offer of $45 a share for Koppers on March 3, a deal that has since been sweetened to $60 per share, or $1.7 billion. The Pittsburgh-based Koppers produces construction materials and chemicals and employs 1,300 people in the Pittsburgh area and 12,300 nationwide.
Freeman said it was unfair to characterize Shearson as having taken an equity position in the takeover attempt.
Steven B. Wolitzer, managing director of Shearson, said the firm’s role was limited to providing short-term, or “bridge,” financing for Beazer’s tender offer and giving advice. Such financing is “typical for investment banks in deals of this kind,” he said.
Acting as Raider
Wolitzer also said Shearson was contributing equity of its own of $23 million in the bidding group, but he said management and control of the group would be held by Beazer.
But Charles R. Pullin, chairman and chief executive of Koppers, said Shearson “has dominated and actively guided every aspect of the planning and execution of the Koppers takeover attempt since its secret initiation one year ago.”
“In effect, what we have is a bank acting as a corporate raider,” said Sen. Jim Sasser (D-Tenn.).
Shearson has crossed the traditional boundary separating banking from commerce and industry, said Sen. John Heinz (R-Pa.).
“Shearson is only the first to cross a line that Wall Street believes will be obliterated by others racing across it in the future,” Heinz said.
Without naming anyone, Freeman said it was “odd” that government officials had “jumped into the fray without taking care to learn about the proposed acquiring company or to familiarize itself with its management and its track record in the U.S. and abroad.”
Beazer Defends Self
Brian C. Beazer, chairman and chief executive of the firm that bears his name, told the Senate panel: “I am not a corporate raider.”
Beazer said his firm was “not the sort of organization that seeks to put people out of work, far from it.”
Commenting on the refusal by Koppers to try to negotiate a merger agreement, Beazer said: “It appears to me that you can never know anything about an opposing side until you at least can hear their view.”
Beazer’s offer has been extended until April 15 while courts consider legal challenges by Koppers that have slowed the takeover bid.
