Coniston Countersuit Challenges Gillette
A New York-based firm seeking control of Gillette Co. filed a countersuit in federal court Tuesday claiming that the personal-care company misrepresented facts in recent legal action and material sent to shareholders.
The countersuit by two Coniston Partners subsidiaries is the latest in a series of exchanges in the courts and in newspapers about Coniston’s attempt to oust four of Gillette’s 12 directors at Thursday’s annual meeting in Andover, Mass.
The Coniston suit alleges Gillette presented misleading and false statements in material sent to its nearly 27,000 shareholders and run in newspapers urging rejection of Coniston’s takeover attempt, said Victor Lewkow, one of Coniston’s attorneys.
Lewkow said Coniston took issue with an indication by Gillette that Coniston was interested in a “greenmail” payment to abandon its bid. Greenmail is the term used when a company buys back its stock from a potential suitor at a premium above the market price.
Lewkow said the countersuit by RB Associates of New Jersey and Bahamas-based RB Partners also seeks dismissal of a Gillette suit filed last week.
The action does not try to block the annual meeting, Lewkow said. He said Coniston could seek monetary damages against Gillette.
On April 14, Gillette filed suit in federal court seeking to block Coniston from soliciting votes from shareholders. Gillette claims Coniston violated federal laws by issuing material that did not fully outline all partners and investors affiliated with the takeover attempt.
On Tuesday, Judge Rya Zobel ordered an April 29 hearing for both suits.
Coniston’s slate of director candidates includes the three Coniston principals and David Strassler, who was also named as a defendant in the Gillette suit. Shareholders can vote in person or by proxy ballot.
Coniston’s bid received a boost Monday when the California Public Employees Retirement Fund, the fifth-largest Gillette shareholder with about 1.5 million shares, announced it will vote for the Coniston candidates.
Results of the voting are not expected for at least a week following the meeting. Gillette said its suit should not delay the meeting.
The two Coniston partnerships have accumulated 6.76 million Gillette shares, or about 5.8% of the company’s shares outstanding.
In several letters to shareholders since March, Gillette Chairman and Chief Executive Colman Mockler Jr. claimed Coniston plans to sell or dismember the Boston-based company.
Coniston states that it can boost company profitability and stock prices at Gillette, which paid nearly $580 million in late 1986 to halt Revlon Group Inc.’s repeated takeover attempts.
Gillette laid off nearly 2,400 workers and sold several unprofitable divisions during restructuring after Revlon signed a 10-year agreement not to seek control of the company.
