Giant Food Inc. Chairman Israel Cohen bought a little more than he bargained for last week in explaining why he is selling some of his nonvoting stock in the company.
Cohen is fond of telling people that while he may not be the best company chairman, he is an excellent grocer. Giant's performance over the years as the area's leading supermarket chain certainly supports that claim.
No grocer ever knowingly mixes apples and oranges, but Cohen found himself in that position last week when he allowed a discussion of his stock sale to spill over into speculation about Giant's future.
Cohen is selling a portion of his 1 million-plus shares of nonvoting stock in Giant, he explained -- at least twice last week -- to buy a condominium and a boat and to improve property he owns in Florida. That seems plausible enough. Investors routinely sell some of their holdings to free cash needed for purchases or other expenses.
Cohen's decision to sell nonvoting stock was somehow linked to his plans for the company, however. A story in The Post last week quoted him as saying that "If someone came along and offered the right kind of price -- 20 times projected earnings -- it would be foolish not to discuss it." That and the story's headline -- "Cohen Weighs Sale of Giant Food" -- set off alarms at Giant headquarters and in the investment community.
Speculation about Giant's future spread quicker than the news of a sale on prime beef. Thus, Cohen was forced to move quickly to assure shareholders and employes that there are no plans to sell the company. "We are not seeking offers for the sale of our company," he insisted in a letter to members of "the Giant Family." Moreover, Cohen wrote, "I have every intention of seeing the company continue under the current ownership and management."
Cohen's decision to sell 296,000 shares of nonvoting stock initially was reported by the Baltimore Business Journal. But the Journal duly reported that Cohen had insisted earlier that he had no intention of selling his voting stock in Giant. Cohen, whose father was a cofounder of Giant, owns 125,000 shares, or half of the voting stock that controls the company. Charlotte Lehrman, the widow of cofounder Jac Lehrman, owns the other 125,000 controlling shares. "I don't have any intention of selling my [controlling] shares, and I don't think Mrs. Lehrman has any intention of selling hers," Cohen told the Journal.
Cohen's statement to the Journal and his letter to Giant associates last week are consistent with declarations he has made in the past.
Asked in January if he had any interest in selling Giant or in acquiring another company, Cohen remarked: "I don't think anyone should say never, ever [but] we're not seeking a merger; we're not seeking any acquisition."
Last week, Cohen acknowledged: "I used to say, 'Never, never.' I don't say that anymore."
The fact that he added he would be foolish not to discuss an offer of 20 times earnings isn't the least bit inconsistent with past statements of his intentions.
Besides being a shrewd business executive, Cohen is a master of repartee. Grasping his rejoinders in conversation can be an interesting mental exercise.
Consider the following excerpts from a recent interview:
Q. Have any suitors expressed interest in the company lately? A. No, not recently. We're not a bride. We're dating. Let's say we're still a date. Really, we're not dating with anyone. No, we're really not seeking any merger. We've got the next 2 1/2 years and it's going to be the greatest in our history in terms of expansion, so now certainly wouldn't be the time.
Q. One thing that keeps coming up is the future of Giant after you're no longer active.
A. We're very strong in management at every level. We have seven people on our management committee and any one of them could step in and take my place.
Q. What about control of the company?
A. You know the structure of the company, the stock structure. At this point, I control the company. We conduct this business as though every share of stock has a vote. We're a public company. We have five outside directors and two in-house directors.
Q. I understand that. But ownership of the company and any decision that is made ultimately about who owns the company, say 20 years from now, is something to be determined by those who hold the voting stock, is it not?
A. Well, I'll say this. I'm not going to go beyond 18 years from now because I'm 72 and I'll be 90 [then]. My Dad was active until he was 90, so I'm going to predict for the next 18 years that hopefully I'm going to be managing this company."
Those who are fairly close to Cohen will tell you that it's not always what he says that matters, but how he says it.