Beverly Enterprises Will Give Secret Data to Murdock
Takeover specialist David H. Murdock has agreed to restrictions on his ability to make a bid for financially troubled Beverly Enterprises in exchange for access to confidential information from the nursing home chain.
Murdock, chairman of Castle & Cooke Inc. in Los Angeles and holder of a 6.5% stake in Pasadena-based Beverly, is prohibited from soliciting proxies or inducing anyone else to initiate a tender offer. If Murdock wants to buy Beverly himself anytime within the next 15 months, he has to submit an all-cash offer for 100% of the stock to the board and wait 20 business days before going ahead.
“I don’t think it prevents a takeover,” said David R. Banks, Beverly’s president. But, Banks added, the restrictions would give the board time to study a bid.
In a previous SEC filing, Murdock said he considers his Beverly stake “an attractive investment” and he expressed support for management. Murdock could not be reached for comment Thursday.
Banks said Murdock has already reviewed confidential company records, but he declined to specify what the information was. William Wright, Beverly’s executive vice president and chief financial officer, said Murdock approached Beverly to discuss his interest in the company in September.
Beverly, which was once extremely profitable, lost $30.4 million on revenue of $2.1 billion last year. It lost an additional $12.3 million in the first nine months of 1988.
The company, whose nursing homes serve more than 100,000 patients nationwide, has also been in trouble with state health authorities. Earlier this month, the company completed a two-year probationary period ordered by California health officials. The company also paid an unprecedented $724,000 fine for providing care so poor that it caused or contributed to the deaths of nine patients, according to state records.
On Wednesday, Beverly disclosed that a six-month study of its operations by the consulting firm McKinsey & Co. called for a “compression” of its management structure. The change is needed, the consultants found, to bring senior management closer to the administrators of Beverly’s 1,000 nursing homes nationwide.
Based on Thursday’s closing price of $5.375 a share, a complete buyout of Beverly would cost about $288 million. Beverly shares rose 12.5 cents on the New York Stock Exchange Thursday.
