Messy Proxy Battle Is Expected at R. P. Scherer Corp. Meeting
The children of R. P. Scherer Corp.’s founder said Monday they were planning to launch a proxy fight at the annual meeting to force a sale of the company, which makes soft gelatin capsules.
The family ties between Scherer’s board and the principal shareholders have set the stage for a messy fight. Karla Scherer Fink, the biggest stockholder and daughter of R. P. Scherer, is also the wife of Scherer president and chief executive Peter Fink, although she filed for a divorce in April.
Karla Scherer Fink and her brother John Scherer, who together control about 38% of the company’s shares, said they had filed papers with the Securities and Exchange Commission stating their intention to solicit proxies on Aug. 17.
Scherer’s board in April rejected Karla Scherer Fink’s proposal to sell the company.
The board, whose members hold a 26% stake in the pharmaceutical supplier, on Monday reiterated its opposition to a sale.
“The majority of the company’s board of directors . . . have clearly stated their belief that the company should remain independent,” a company spokeswoman told Reuters.
“A proxy fight appears to be the only way to convince management that sale of the company is in the best interests of all the people who own the company,” John Scherer said in a statement.
Karla Scherer Fink has estimated the liquidation value of her holdings in the pharmaceutical supplier at about $40 million. This includes the holdings of her daughters, for whom she is trustee.
But she may not sell her stake, a 40% holding of the company’s Class B shares, on the open market without first converting it to common shares and forfeiting the bulk of the voting power.
The company’s anti-takeover provisions, adopted four years ago, require that shareholders representing an 80% majority override the board on matters relating to the sale of assets.
Industry analysts so far have not given Karla Scherer Fink and her brother much chance of winning the proxy fight, and some say they doubt a buyer for the whole company could easily be found. The stock finished down 87.5 cents at $27.75.
Scherer, which earned $15.1 million on sales of $290.7 million for the year ended March 31, is the world’s-largest supplier of soft-gelatin capsules to drug manufacturers.
Peter Fink, former president of the Travco Corp., succeeded R. P. Scherer as president in 1979 after Scherer left the company following a disagreement with the board.
Fink last month said the board would consider favorably an offer to buy out his wife and her brother. His wife had filed for divorce a few weeks earlier.
