No minister suggested that lawyers for McCormick & Co. speak now or forever hold their peace, but the lawyers spoke anyway -- just 12 minutes before stockholders of the Stange Co. settled down in a conference room on the 13th floor of the first National Bank Building to vote approval of the vows between Stange and McCormick.
That was Tuesday. The day before, a California fast-food chain filed suit against Stange, claiming $22.5 million in damages for breach of contract, and the McCormick lawyers wanted to know just what their company was stepping into. It took only 24 hours for the McCormick lawyers to decide that there was no real impediment to the marriage, and the formal sealing of the merger took place Wednesday.
Altogether it was a very modern marriage as things go in the corporate world. Neither party really wanted to give up any degree of independence, even though getting together made very good economic sense.
But there was a compelling reason for the marriage. As with so many corporate mergers in recent days, the idea was to create a refuge safe from invaders. The sharks had been circling both companies for some time.
For instance, it took McCormick & Co., the big Baltimore spices and foods company, nearly a year to fight off a takeover by Sandoz Ltd., a major Swiss corporation. In the end, it cost McCormick $13 million, not counting fees to lawyers and consultants, to maintain its freedom and independence. That's what McCormick paid to buy back the 465,000 shares of McCormick stock Sandoz had acquired.
On any number of occassions over the last 10 years, Stange Co., a much smaller but thriving Chicago manufacturer of food seasonings, has had to tell eager suitors that it wanted very much to remain independent and had no interest in a merger. Most recently Iroquois Brands Inc. -- a New York congolomerate that purveys a variety of products including vitamins, herbal teas, beverages (Yoo-Hoo Chocolate Drink, Black Horse Ale) and grocery items such as Major Grey's Chutney -- made a serious pass at Stange.
Over the protest of Stange President Ted R. Miles and the Stange board, Iroquois accumulated 180,000 shares of Stange stock and aimed to acquire full control of the company.
That was enough for Stange. As a proxy statement issued in connection with the merger of Stange and McCormick notes the Iroquois stock purchases "eventually led Stange's management to reconsider it long-standing policy of remaining independent" and discussions were held with "several companies, including McCormick."
As things worked out, one clause in the prenuptial agreement commited McCormick to buy back all those shares from Iroquois. The price, $13.25 a share, was the same offered to Stange shareholders to complete the merger with McCormick. (Stange stockholders could take either cash or the equivelent in McCormick shares.) Thus, Iroquios was paid $2.3 million. t
There's a suspicion that some companies these days are playiung a game, setting up an acquisition move and hoping that, at worst, they can make a tidy profit on the stock they acquire. In any event, Iroquois, having picked up some stock for less than $7 a share, made a profit of upwards of $800,000.
For any number of reasons, Stange is happy with the McCormick merger. As the proxy statement says, "McCormick, like Stange, insisted over many years upon remaining independent," and Stange's president and chief executive officer thinks his firm will retain a large measure of independence as a seperate subsidiary of McCormick.
Not only that, but Miles thinks Stange, a 76-year-old company, will have new opportunities for growth. Stange is a relatively small outfit. Last year, sales came in at about $60 million vs. McCormick's $500 million. But Stange makes various seasonings for fast-food chains, food processors and institutional food purveyors. For instance, for nearly 20 years it has made up Kentucky Fried Chicken's secret compound of 11 seasonings and it had been a longtime supplier of ingredients for Heinz catsup.
McCormick's big business is spices and seasonings for the home kitchen sold through retail stores, but in a small way it also operates in Stange's field, so there is a fit and possibilities for mutual help.
Miles, now equipped with an employment contract and something like 80,000 shares of McCormick stock, is pleased that the battles with the corporate sharks are over so that he can get back to business full time. He hopes that Stange, standing alone and without help from McCormick, can boost its sales by $10 million this year and its operating profits by 12 percent.