A good deal of ink has been given to the battle for control of SCM Corp. But yet to surface is a tough SCM strategy that could turn the entire affair into one of the dirtiest corporate fights yet.
There are bound to be lasting scars regardless of who wins the battle for the sprawling $1.9 billion conglomerate that incudes such well-known consumer products as Smith Corona typewriters, Durkee spices and Proctor-Silex appliances.
In fighting to stave off its second unwanted suitor in just about a year, SCM (with sales of $1.9 billion) will unleash an intensive probe of the dissident slate of board candidates. Since the slate includes the chief executives of a number of leading corporations -- such as Dresser Industries, Hudson Oil and Joy Mfg. Co. -- SCM will take a hard look at how these companies fared under their current leadership.
More importantly, though (and here's where it could get downright nasty), SCM will make a thorough investigation of the ethical character of these very same executives to see if there're any skeletons in the closet.
Among other things, SCM, as best it can, will examine whether there's been any improper use of bank loans by members of the dissident slate -- both in personal dealings with banks with which their companies do business and in the purchase of SCM shares. The dissident slate holds about 2 percent of SCM's stock.
Did any member of the dissident slate go overboard on the use of corporate "perks" -- such as company apartments, aircraft and limousines? That'll also be looked at with a fine-toothed comb.
Sounds like SCM means business -- and it does. But wait, there's more.
SCM -- which may file a lawsuit and go so far as to actually depose board candidates from the rival group -- will look at whether any member of the dissident slate belongs to any restricted clubs.
SCM also is planning -- under the Freedom of Information Act -- to solicit records from a number of government agencies, including the Securities and Exchange Commission and the Commerce Department. The inquiry at the latter pertains to an effort to determine whether any company in the dissident camp -- especially Dresser, I'm told -- is violating the antiboycott act by selling to the Arab community and purposely shunning Israel.
"We're going to look at everyone's fitness on the dissident slate . . . and they'd better be cleaner than Santa Clause," says one intimately involved in shaping SCM's antitakeover strategy.
The slate is headed by Willard Rockwell Jr., the 66-year-old chairman of Rockwell International. And it includes such business figures as John James, chairman of Dresser Industries; Mary Hudson, chairman of Hudson Oil; J. W. Wilcock, chairman of Joy Mfg. Co; Will Burgess, chairman of International Controls, and Robert Wilson, former chief executive of Memorex.
Rockwell, who's reported to have lost out in a power struggle in 1978 to current Rockwell International chief Robert Anderson, has been on a publicity binge knocking SCM -- almost running from one publication to another. And no wonder. SCM told him to get lost last April when he visited the firm and urged management to make him chairman. And so Rockwell, who holds about 125,000 SCM shares (around 1.3 percent), decided to stage a proxy fight to get his way.
Since the last proxy fight drew 31 percent of the vote for the dissidents -- and this time out the slate's much more powerful -- SCM clearly had its hands full. The outcome will be decided Oct. 30 when SCM shareholders, at the annual meeting, cast their ballots as to whether they feel there's any legitimacy to Rockwell's plans for the company.
Those plans, in brief, involve selling off the food division (Durkee) and splitting up the remainder of the business into separate companies and then spinning them off to shareholders.
With SCM carrying a book value of around $47 a share and its stock at about $30, Rockwell figures a planned reorganization of the company could add appreciably to SCM's worth.
I tried reaching Rockwell and a number of the dissident slate members but was told by the various secretaries that the New York public relations firm of Burson-Marsteller was handling all such requests.
One of the fawning PR types there tried to fend me off, explaining that Rockwell was absolutely not permitted to talk to the press because the dissident group was preparing proxy material.
That was a lie, Rockwell offered comments, as did one other dissident member. If nothing else, it gives you an insight into how Burson-Marsteller, a high-powered and high-priced PR firm, conducts its business.
I told Rockwell that SCM was going to take an especially hard look at his corporate expenses, since there was some question of whether his extensive company-paid travels were strictly all business.
"I'm not worried," he replied. "I'm successful, and I've lived a clean life . . . ."
Rockwell went on to say that "I've had skunks on either side before, and I'll hold my nose and laugh at them."
If he's successful in the proxy fight, Rockwell says he'll get rid of both Paul Elicker (SCM's chief executive) and George Hall (senior vice president of administration) because "they're both incompetent."
What would it take to get rid of you?
"Forty-five dollars a share for me and all the other stockholders," he snapped back. "If not, I'm in to the finish. . . ."
A dissident slate member, Clifford V. Brokaw II, the head in Invail Captial Inc., a New York investment banking firm, was steaming after I related SCM's plans to investigate the integrity of the Rockwell group.
"Their bottom line is so lousy that they have to attack the individual . . . to sling mud in the hopes of coming up with something; but their gutter tatics are not going to work," he says. A long-time friend of Rockwell's, Brokaw told me, "SCM has a lousy board, a lousy record and lousy management." And he went on to say that this would be brought out in the group's offense, which he indicated would focus on SCM's quality of earnings, its high corporate, general and adminsitrative expenses and the poor performances of a number of its divisions.
I asked SCM's Hall if the company was trying to intimidate Rockwell's supporters by going on a witch hunt.
He emphatically denied it. "We've been attacked, and we're defending ourselves," he says. "We're going to play rough, but it'll be within ethical bounds."
The way the two sides are talking, maybe I ought to sell rocks outside that SCM annual meeting.