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Scherer Board Looks Into Possible Sale of Company

October 3, 1988

DETROIT (AP) _ R.P. Scherer Corp. management said Monday it had hired an investment banker to explore the possible sale of the company, a reversal that marks an apparent victory for dissident shareholders led by the company founder’s daughter.

In a unanimous decision Friday, 10 members of the Scherer board of directors voted to hire Goldman, Sachs & Co. to look into a variety of alternatives, including sale to a third party or a management buyout.

The vote came two months after the conclusion of a bitter proxy fight won by Karla Scherer Fink, Scherer’s largest shareholder and daughter of the company’s late founder, in an attempt to pressure the board to sell the company.

Heading the opposition was Peter Fink, the company’s president and chief executive officer and Fink’s estranged husband.

The dissident group also successfully blocked several management stock- option proposals. Mrs. Fink controls about 33 percent of the company’s shares.

Mrs. Fink and her brother, John Scherer, waged their successful proxy fight at the company’s annual meeting in August, ousting at least one director who opposed their plan to sell the company.

Scherer spokeswoman Jayne Colombo declined to say Monday whether the vote by Fink and others to explore a possible sale represented a shift in their positions.

Scherer stock closed at $28.75 a share on Monday, up 25 cents from Friday’s close in national over-the-counter trading.

Dean Gulis, an analyst with the firm William C. Roney & Co. of Detroit said recent action in the over-the-counter market ″represented a very attractive price for this stock.″

During the past several months, while the corporate wrangling has been going on, Scherer stock has been trading in the mid- to upper-$20 range.

″I think it (Friday’s decision) is just a recognition that, ’OK, we have a big chunk of the stock that wants to sell the company and fine, let’s see if we can sell the company,‴ Gulis said.

In addition to sale, the board said in a news release the firm would look into a possible merger or recapitalization. Fink said the decision to hire Goldman, Sachs did not mean the company would be sold.

The board is to meet again Oct. 25 and will review findings of the firm’s investigation.

Suits and countersuits have been filed during the past few months as the two factions struggled to gain control of the company, a maker of gelatin capsules for pharmaceuticals.

Pending before the Delaware Chancery Court are complaints by directors John Scherer, Frederick Frank and Theodore Souris, who have said they favor selling the 2,800-employee company, and Peter A. Dow, who has backed keeping the company. Dow, who was running for re-election, said some votes for him were not counted in the August board election.

Also on Monday, Fink announced that Scherer Chairman Wilber Hadley Mack, 78, had retired after serving as chairman since January 1980. Fink stated that Mack would remain a member of the company’s board and its executive committee.

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