Five Directors of American Brands Resign
A shake-up on the board of American Brands Inc. Tuesday gave outside directors control of the diversified company, which sells everything from cigarettes to life insurance to Jim Beam bourbon.
The changes quickly incited speculation that American Brands might become a takeover target. The company’s stock closed up $1.25 at $6 in heavy trading on the New York Stock Exchange.
In a brief statement, William J. Alley, American Brands chairman and chief executive, announced that five management directors have resigned from the company’s 17-member board.
Alley also announced that Gordon R. Lohman, president of Chicago-based Amsted Industries Inc., had been elected to the board.
Lohman’s election gave outside directors seven of the 13 spots on the board.
One analyst said the move could foreshadow a buyout attempt by the board, but others saw the shake-up simply as part of a trend toward outside control of large companies.
“The trend is in that direction, toward more outside directors.” said Emanuel Goldman, an analyst for Paine Webber. “I wouldn’t venture to say that anybody’s out to take anybody over at this point.”
Said Eugene R. Anderson, a New York lawyer and one of the seven outside directors: “This is kind of a non-event in the history of American Brands.”
One analyst, Allan Kaplan of Merrill Lynch, noted that several of American Brands’ divisions would be attractive as individual properties. He said the changes on the board could foreshadow a buyout offer by the directors.
“I don’t know of any other reason why they would do that,” he said.
The company has four core divisions: tobacco, distilled spirits, life insurance and office products. Its brands include Carlton, Lucky Strike, Tareyton and Pall Mall cigarettes, Gilbey’s gin and vodka, Jim Beam bourbon and Titleist golf products.
The company reported earnings of $631 million or $6.51 per share on sales of $11.92 billion in 1989, and earnings of $580 million or $5.44 per share in 1988, said spokesman Roger Baker.
