Shaklee Accepts $395-Million Bid From Japanese Drug Company

Shaklee Corp., the personal-care products company that for months has been trying to fend off corporate raider Irwin L. Jacobs, on Monday made an end run around its hostile bidder by accepting a $395-million buyout offer from Japan’s Yamanouchi Pharmaceuticals Co.

Jacobs, signaling the likely end of the takeover battle, said he would not submit a new offer.

The Yamanouchi offer--which, including a special dividend, amounts to $48 a share--came a month after Yamanouchi paid $350 million to acquire Shaklee’s Japanese operations. Those operations account for about 40% of Shaklee’s earnings.

David M. Chamberlain, president of San Francisco-based Shaklee, said anyone offering a competing bid would have approximately 20 days to submit it before the Yamanouchi agreement is finalized.

Jacobs, whose offer in March amounted to $40 a share, could not be reached for comment. But Dow Jones Professional Investor Report quoted the Minneapolis-based investor as saying he will tender his 1.97 million shares to Yamanouchi unless a higher offer emerges.

“We will not be competing at that level,” Jacobs said. “We’d be acting like children if we said it was not a fair price.”

Jacobs offered to buy Shaklee on March 3 after acquiring 14.98% of the company. Jacobs will make about $40 million if the Yamanouchi deal goes through as planned.

Analysts said Monday that it is unlikely that Jacobs or any other corporate raider would top Yamanouchi’s offer for Shaklee, whose growth has stalled in recent years.

“Right now it’s a good deal all around,” said Gerald S. May, an analyst for Paine Webber. “Shareholders do very nicely. I don’t see where there’s a loser, and Mr. Jacobs comes out on top, too.”

Dan Williams, an analyst with the San Francisco investment house Sutro & Co., added: “I frankly thought $40 a share was a generous price. I’m still hard pressed to understand what is the attraction of the company” since, Williams noted, it has few hard assets like real estate, plants and office buildings.

‘Substantial Premium’

Wall Street, however, was of a different mind. In trading on the New York Stock Exchange, Shaklee shares jumped $9.25, or 24%, to close at $47 on the New York Stock Exchange on Monday.

Shaklee’s present management will continue to run the company after the merger and will have a substantial equity interest in it, company officials said. Under the deal, Shaklee must pay Yamanouchi $16 million if another bidder buys the company under unspecified certain circumstances.

“This transaction provides our shareholders with a substantial premium over recent trading levels and represents an excellent value for our shareholders,” Shaklee Chairman Earl F. Cheit said in a prepared statement.

Shaklee, which sells food, vitamins, cosmetics and household products to consumers through a direct sales force of about 10,000 independent distributors, was founded in 1956 by the late Forrest C. Shaklee Sr., a chiropractor, and his two sons, Raleigh L. and Forrest Jr.

The elder Shaklee built his company by saying its products were in “harmony with nature.” But over the years, the elder Shaklee was accused of making outrageous health claims for his vitamins and food supplements. In 1976, for example, the Food and Drug Administration charged that the company mislabeled some of its goods.

Shaklee earned $23.5 million on sales of $571.8 million in 1988, and stands to net $180 million this year from the sale of Shaklee Japan. Yamanouchi, a leading Japanese drug concern, earned about $173 million last year on sales of about $1.42 billion.