START WITH A BANG, GO OUT WITH A WHIMPER. When Dwight Schar’s NVHomes launched a hostile takeover bid for Ryan Homes on September 29, Ryan’s executives weren’t exactly pleased. They turned to the proverbial poison pill, outfitted themselves with platinum parachutes, and denounced Schar’s bid as “illusory, misleading, and unlawful.” They called NvHomes’s $45-a-share tender offer “inadequate” and urged their shareholders to reject it.
In documents filed with the SEC, however, Ryan then found itself in the awkward position of having to disclose that Malcolm Prine, its chairman, had dumped 37,000 shares of Ryan’s stock in late August at prices ranging from $36.25 to $36.50. (Prine wasn’t alone: two other Ryan executives had unloaded thousands of shares, some of them just a week before the tender offer, at prices below $45.)
Ryan finally surrendered to NVHomes on October 31, in a cash and stock deal worth $360 million. What goes around, they say, comes around. Back in 1977, when he resigned to go into business for himself, Schar was Ryan’s vice president in the Washington area.
NICE WORK IF YOU CAN GET IT. The smart money in the race for Ryan Homes should have been riding all along on Shearson Lehman, Ryan’s financial adviser. Call investment bankers whatever you want, but don’t call them stupid. Shearson’s contract with Ryan called for a $500,000 fee plus expenses in the event that NVHomes came up short in its takeover bid. In the event that Ryan wound up being acquired by NVHomes or anyone else, however, Shearson’s contract specified that it would be paid 0.875 percent of the eventual purchase price.
The way we figure it, $360 million times 0.00875 is $3,150,000.
WHEN YOU’RE UP TO YOUR ASS IN ALLIGATORS, IT’S TIME TO SELL THE SWAMP. If Morton Lapides gets what he wants, he may soon find himself back in the minor leagues of big business.
What Lapides wants is the right price for Service America Corporation, Allegheny Beverage Corporation’s mammoth vending and food-service operation. Lapides created Service America last year by rolling his two biggest acquisitions, Macke Company and Servomation Corporation, into one subsidiary. Lately, however, Allegheny Beverage has been losing money in a big way, and its stock has been on a deep slide downward, from $22.50 a share in June to $12.50 a share at the beginning of November. Lapides owns 1.4 million shares of the stuff, and has options to buy 669,000 more; ever wonder how it feels to have your net worth take a $14 million nosedive in less than four months?
But here’s the rub. The assets of Allegheny Beverage — indeed, the assets of Service America alone — are worth much more than the company’s current market value, a situation that normally would make it an inviting takeover target. Lapides, however, controls a special class of preferred stock in the company and five of nine seats on its board of directors. “As a consequence, he’s virtually merger-proof,” says Anthony Pierce-Batten, an analyst with Legg Mason. “He’s got a lock on the company, in effect.”
That means there isn’t likely to be a good play in Allegheny Beverage until Lapides makes a big move. (Indeed, the mere mention that Service America might be for sale pushed the price of Allegheny Beverage’s stock up by $2.62 in a day.) Pierce-Batten and other analysts say that Service America, which now accounts for nearly 90 percent of Allegheny Beverage’s total sales, should fetch upwards of $450 million.
And what would Lapides do with all that cash? Well, he could start building a billion-dollar company all over again.
NASD ERASES CHALK. Roy Chalk’s D.C. Trading & Development Corporation isn’t trading anymore. With $1.1 million in net losses during the first half of 1985, stockholders’ equity in the company sank to minus $216,653. That caused the National Association of Securities Dealers to “delist” D.C. Trading on October 1 for falling below the minimum equity requirement of $375,000.
Chalk, the one-time D.C. Transit czar, has been trying to deal his financially troubled company into profitability with a futuristic machine-tool shop dubbed DCTECH Research Center. But Chalk’s high-tech widget factory hasn’t yet found enough folks who need widgets. In the first half of 1985, according to financial statements filed with the Securities and Exchange Commission, DCTECH lost $385,000.
Under the Counter
START WITH A BANG, GO OUT WITH A WHIMPER. When Dwight Schar’s NVHomes launched a hostile takeover bid for Ryan Homes on September 29, Ryan’s executives weren’t exactly pleased. They turned to the proverbial poison pill, outfitted themselves with platinum parachutes, and denounced Schar’s bid as “illusory, misleading, and unlawful.” They called NvHomes’s $45-a-share tender offer “inadequate” and urged their shareholders to reject it.
In documents filed with the SEC, however, Ryan then found itself in the awkward position of having to disclose that Malcolm Prine, its chairman, had dumped 37,000 shares of Ryan’s stock in late August at prices ranging from $36.25 to $36.50. (Prine wasn’t alone: two other Ryan executives had unloaded thousands of shares, some of them just a week before the tender offer, at prices below $45.)
Ryan finally surrendered to NVHomes on October 31, in a cash and stock deal worth $360 million. What goes around, they say, comes around. Back in 1977, when he resigned to go into business for himself, Schar was Ryan’s vice president in the Washington area.
NICE WORK IF YOU CAN GET IT. The smart money in the race for Ryan Homes should have been riding all along on Shearson Lehman, Ryan’s financial adviser. Call investment bankers whatever you want, but don’t call them stupid. Shearson’s contract with Ryan called for a $500,000 fee plus expenses in the event that NVHomes came up short in its takeover bid. In the event that Ryan wound up being acquired by NVHomes or anyone else, however, Shearson’s contract specified that it would be paid 0.875 percent of the eventual purchase price.
The way we figure it, $360 million times 0.00875 is $3,150,000.
WHEN YOU’RE UP TO YOUR ASS IN ALLIGATORS, IT’S TIME TO SELL THE SWAMP. If Morton Lapides gets what he wants, he may soon find himself back in the minor leagues of big business.
What Lapides wants is the right price for Service America Corporation, Allegheny Beverage Corporation’s mammoth vending and food-service operation. Lapides created Service America last year by rolling his two biggest acquisitions, Macke Company and Servomation Corporation, into one subsidiary. Lately, however, Allegheny Beverage has been losing money in a big way, and its stock has been on a deep slide downward, from $22.50 a share in June to $12.50 a share at the beginning of November. Lapides owns 1.4 million shares of the stuff, and has options to buy 669,000 more; ever wonder how it feels to have your net worth take a $14 million nosedive in less than four months?
But here’s the rub. The assets of Allegheny Beverage — indeed, the assets of Service America alone — are worth much more than the company’s current market value, a situation that normally would make it an inviting takeover target. Lapides, however, controls a special class of preferred stock in the company and five of nine seats on its board of directors. “As a consequence, he’s virtually merger-proof,” says Anthony Pierce-Batten, an analyst with Legg Mason. “He’s got a lock on the company, in effect.”
That means there isn’t likely to be a good play in Allegheny Beverage until Lapides makes a big move. (Indeed, the mere mention that Service America might be for sale pushed the price of Allegheny Beverage’s stock up by $2.62 in a day.) Pierce-Batten and other analysts say that Service America, which now accounts for nearly 90 percent of Allegheny Beverage’s total sales, should fetch upwards of $450 million.
And what would Lapides do with all that cash? Well, he could start building a billion-dollar company all over again.
NASD ERASES CHALK. Roy Chalk’s D.C. Trading & Development Corporation isn’t trading anymore. With $1.1 million in net losses during the first half of 1985, stockholders’ equity in the company sank to minus $216,653. That caused the National Association of Securities Dealers to “delist” D.C. Trading on October 1 for falling below the minimum equity requirement of $375,000.
Chalk, the one-time D.C. Transit czar, has been trying to deal his financially troubled company into profitability with a futuristic machine-tool shop dubbed DCTECH Research Center. But Chalk’s high-tech widget factory hasn’t yet found enough folks who need widgets. In the first half of 1985, according to financial statements filed with the Securities and Exchange Commission, DCTECH lost $385,000.
Allegheny Beverage Corporation Anthony Pierce-Batten D.C. Trading & Development Corporation D.C. Transit DCTECH Research Center Dwight Schar Legg Mason Macke Company Malcolm Prine Morton Lapides NASDAQ' National Association of Securities Dealers NVHomes O. Roy Chalk Ryan Homes Service America Corporation Servomation Corporation Shearson Lehman