Pressing its bid to buy McCormick & Co., the big Baltimore spice maker, Sandoz Ltd. of Switzerland urged members of McCormick's board of directors yesterday to consider Sandoz' offer.
Outright rejection of Sandoz' bid could get McCormick board members in trouble with the Securities and Exchange Commission and open them up to Lawsuits by stockholders, Sandoz warned.
In an unusual corporate takeover tactic, Sandoz Chairman Yves Dunant sent letters yesterday to each McCormick director appealing for support.
The letter, which was made public by Sandoz, repeated the offer Dunant made Tuesday in a meeting with McCormick Chairman Harry K. Wells and other top executives of the company.
Sandoz said it was prepared to pay about $418 million in cash to buy McCormick, offering $37 a share for McCormick stock that has traded recently in the over-the-counter market for $25 a share to $27 a share.
Dunant complained in his letter that "instead of discussing the terms of our proposal," McCormick executives "spoke to us mainly about your company's policy of independence."
Sandoz' bid for McCormick is being coorinated by Wall Street lawyer Joseph Flom, who has a reputation as "king of takeovers," specializing in innovative approaches to corporate power struggles.
In his letter to the McCormick board, the Sandoz chairman subtly hinted at the legal implications of rejecting his offer.
"There apparently is such a strong predispostion among some members of management about McCormick's independence that it may make it difficult for you, as a director, to reach an objective determination about what truly is in the best interest of all shareholders."
Dunant's letter noted that SEC Chairman Harold Williams recently made a major speech in which he "stressed his concern about the conflict of interest questions which are often presented in the evaluation of merger and acquisition proposals."
The letter noted that Williams "suggested that the ultimate responsibility for objective decisions regarding acquisition proposals should rest with a company's outside directors. Since McCormick has no outside directors, I know how carefully you will want to approach your evaluation of our proposal."
The Sandoz chairman said that if McCormick agrees to sell out, the spice company's name will remain the same, its headquarters will be kept in Baltimore and top executives probably will be retained.
Known primarily as a chemical and drug company, Sandoz is based in Basel, Switzerland, and has an American subsidiary headquartered in Hanover, N.J.