Irvine Rival Seeks Seats on the Board of Giant Group
Fidelity National Financial Inc. on Friday fired the first salvo in a potentially bitter proxy battle by declaring its intent to seek all four seats on the board of Beverly Hills-based Giant Group Ltd.
The Irvine-based title insurance company in February offered $49 million in its own stock for Giant Group’s outstanding shares, but Giant Group and its chairman, Burt Sugarman, rejected the unsolicited bid, flatly stating that the company wasn’t for sale.
Giant Group spokesman Terry Christensen on Friday declined to comment on Fidelity National’s latest move. “I understand that a package was delivered today, but I’ve not yet seen it,” he said.
Fidelity National, in a press release Friday, contended that Giant Group had “failed to conduct a serious analysis” before rejecting the title insurance company’s unsolicited bid. Fidelity National also argued that the stock-swap offer “is in the best interests” of Giant shareholders.
Fidelity National evidently will try to persuade Giant Group shareholders that the board isn’t looking out for their best interests. On Friday, the company hinted that Giant Group’s board was attempting to strengthen its hold on the company at shareholders’ expense.
Fidelity National earlier amassed a 14.6% stake in Giant Group, which is controlled by its current board and Sugarman, an investor and former Hollywood producer. Fidelity’s chairman, William P. Foley II, has described the Beverly Hills-based holding company as undervalued, with a balance sheet that includes an estimated $50 million in cash, tax benefits and receivables. Giant Group also holds a 47% stake in the Rally’s Hamburgers Inc. chain. It has no other holdings.
Giant was unchanged at $9 on the NYSE on Friday, while Fidelity eased 25 cents to $16.625, also in NYSE trading.
Giant Group hasn’t yet scheduled a date for the company’s upcoming annual shareholder meeting, Christensen said. In 1995, the company’s annual meeting was held in mid-May.
Fidelity National also threatened to seek a liquidation of Giant Group if a deal isn’t forthcoming. The company said it would distribute Giant Group’s assets--cash and shares of the Rally’s chain--to the company’s shareholders.
In addition to trading harshly worded press releases, Fidelity National and Giant Group have also lodged lawsuits against each other in federal court.
Giant Group initially alleged that Fidelity chairman Foley failed to follow federal securities guidelines when his company acquired its 14.6% stake. Fidelity National responded with a suit alleging that Giant Group’s board had defamed Foley and illegally initiated a series of complicated stock transactions to strengthen its hold on the company.
The four board members who Fidelity National intends to nominate are: Roger D. Loomis Jr., 47, a shareholder in the law firm of Buchalter, Nemer, Fields & Younger; Seymour Preston Jr., 51, a senior vice president with Goldin Assoc.; Andrew F. Puzder, 45, executive vice president and general counsel at Fidelity National; and Frank P. Willey, 42, president and director of Fidelity National.
