Apria Drops Partner Quest
Apria Healthcare Group Inc.’s board of directors voted Wednesday to call off the company’s search for a possible merger partner and press ahead as an independent company.
At the conclusion of a four-hour meeting Wednesday, five directors of the Costa Mesa company resigned, including two who were involved in potential bids for the company: Orange County developer George L. Argyros and investment banker Frederick S. Moseley.
A source said all five voluntarily stepped down at the urging of Ralph V. Whitworth, who replaced Argyros last month as chairman of the nation’s largest home health care company.
Whitworth, a former shareholder activist, is an executive at Relational Investors LLC, Apria’s largest shareholder with a 9.9% stake.
Argyros said through a spokesman that he resigned to “maximize flexibility” in managing his sizable Apria stock holdings. His 5.4% stake in the company--worth more than $90 million two years ago--is now valued at less than $30 million.
Moseley couldn’t be reached for comment.
The announcement came after the stock markets closed Wednesday. Apria shares rose 13 cents, to $9, in New York Stock Exchange trading.
Whitworth said the resignations “allow us to reconfigure the board, so that it functions better.” He has blamed much of the financially wayward company’s troubles on a board that had been split ever since Apria was formed in the 1995 merger of Orange County rivals Homedco Group Inc. and Abbey Healthcare Group Inc.
“What had disturbed me was that the board continued to function along the fault line defined by the previous merger and that we were dealing with a fractional board,” he said.
That was making it difficult to improve the sagging fortunes of Apria, whose stock price has fallen 33% this year, and 48% over the past 12 months. In addition, the company lost $272.6 million in fiscal 1997 on sales of $1.1 billion.
Whitworth said that directors initially were divided even over the hiring this month of turnaround specialist Philip L. Carter as chief executive. Whitworth said, however, that the board has since thrown its full support behind Carter.
Other directors resigning Wednesday included Jeremy M. Jones, who stepped down as Apria’s chairman and chief executive in January; PacifiCare Health Systems Inc. Chairman Terry Hartshorn, and Vincent M. Prager.
Now that the company’s board has shrunk to six members, Whitworth said Apria will reach out to shareholders for nominees of possible new directors.
He wasn’t sure whether all five directors will be replaced. He said that at least one new director will be endorsed by Michael Price’s Franklin Mutual Advisors, Apria’s second-largest shareholder with an 8.4% stake.
The company will hold its annual meeting July 28. Whitworth said the company has a couple of weeks to compile a proxy listing board nominees in advance of the meeting.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Board Shuffle
Five Apria Healthcare Group directors resigned Wednesday. Who’s leaving and who’s staying at Apria:
LEAVING
* George L. Argyros: chairman / CEO, Arnel & Affiliates
* Terry Hartshorn: chairman, PacifiCare Health Systems
* Jeremy M. Jones: former chairman / CEO of Apria and its predecessor, Homedco
* Frederick S. Moseley: managing director, Triumph Corporate Finance Group
* Vincent M. Prager: partner at Stikeman, Elliott
STAYING
* Phillip L. Carter: CEO, Apria Healthcare
* David L. Goldsmith: managing director, Bankamerica Robertson Stephens
* Leonard Green: president / CEO, Green Management and Investment Co.
* Richard H. Koppes: attorney with Jones, Day, Reavis & Pogue; former deputy executive officer and general counsel at the California Public Employees Retirement System
* H.J. Mark Tompkins: CEO, Exfinco
* Ralph V. Whitworth: Apria chairman; principal investor, Relational Investors, LLC
Source: Apria Healthcare Group
