Gillette, Coniston Settle Suits, Ending Battle for Control of Blade Maker

Gillette Co. and Coniston Group said Monday that they resolved litigation over seats on Gillette’s board--a move that ends the battle for control of the company and could give the New York investment firm a hefty $52-million profit.

In return, Coniston, which wanted to put Gillette up for sale, agreed not to buy large amounts of its shares, try to take over or influence Gillette for three years.

As part of the agreement, Gillette said it would buy back about 14.3% of its shares from all holders for a total of $720 million, at a fixed $45 a share.

Coniston, Gillette’s largest shareholder, paid about $31.50 for each of its 7.4 million shares. In addition to selling 1.06 million shares back to Gillette at the set price of $45 a share, or $47.6 million, the remainder of its shares would be worth around $238 million.

The litigation, which involved suits by both companies, stemmed from Coniston’s unsuccessful efforts earlier this year to win four seats on the 12-member Gillette board.

Coniston partner Augustus Oliver said the firm had not yet decided whether to accept Gillette’s buyback offer.

“We think it’s a very good value for shareholders and we intend to take advantage of it in some way,” he said.

The settlement sent Gillette’s shares down sharply on the New York Stock Exchange, and they closed down $2.625 at $37.50.

Analysts and stock speculators said the agreement signaled the end of the takeover battle for the company and makes its shares less attractive to investors. “It’s over, unless you want to speculate that there’s somebody else out there,” said an arbitrager on Wall Street.

Gillette did not rule out the possibility of another takeover offer. Colman Mockler Jr., Gillette chairman and chief executive, said in a statement, “As in the past, the board will continue to consider fully and fairly all proposals or other alternatives to maximize stockholder value.”

Under the plan, stockholders would get one share repurchase right for each seven shares of Gillette stock held. Each right allows the holder to sell Gillette one share of common stock at $45 per share.

The settlement also provides that Gillette not enforce pacts it had with certain corporations and investment firms that prevented them from purchasing Gillette stock for two years. Under the agreements, signed in November, 1986, and September, 1987, 10 potential suitors agreed not to make a takeover offer without permission in return for confidential information about Gillete’s finances.

Gillette said the stock buyback should result in little change in its earnings per share for the next 18 months, but that there should be an increase after that time. No change in the dividend is planned for the present.

Mockler said in an interview, “We still expect the business to grow for the next several years well above the 12%” experienced by the industry as a whole.

He said Gillette does not plan any massive restructuring, major sales or major acquisitions for the next few years. Later, however, Gillette will concentrate on expanding into a new business still related to the consumer products market.

In the litigation that ended Monday, Coniston had sued Gillette, claiming that it ran misleading advertisements that helped current management win the four board seats. Gillette in turn sued Coniston, alleging that it violated U.S. securities laws by not disclosing all of its partners.

Last month, a federal district judge ruled that Gillette had tainted the election with false advertisements during the final days of the April proxy contest. He said it was likely that he would order Gillette to hold a new election of directors.

Gillette, the world’s largest razor blade manufacturer, also makes a range of other personal care products including deodorant and shampoo and has small revenues from the Papermate ballpoint pen line and Braun small electrical appliances.

The company was a takeover target of Ronald O. Perelman, chairman of Revlon, in 1986 and 1987. It has also frequently been the subject of takeover rumors involving a range of potential suitors including Philip Morris Cos., Nestle SA and Black & Decker Corp.