Hanson Trust PLC said late yesterday it won an important victory in its battle for control of SCM Corp. when a New York judge blocked SCM from selling certain businesses at bargain prices in order to defeat Hanson's hostile takeover bid.
Sir Gordon White, chairman of the diversified British company's U.S. operations, said Hanson was "delighted" by yesterday's decision in the U.S. Court of Appeals for the Second Circuit. A spokesman for SCM, which makes well-known consumer products, including Smith-Corona typewriters and Durkee foods, said the company had not seen the decision and had no comment.
Sir Gordon also said yesterday that Hanson intends to proceed with its $75-a-share, $630 million hostile takeover bid for the two-thirds of SCM that it does not already own. The bid had been on hold pending yesterday's ruling in the New York appeals court.
To avoid a takeover by Hanson, SCM agreed to be acquired last year for $74 a share by Merrill Lynch Capital Partners and certain members of SCM management. As part of that deal, SCM also entered into controversial "lock-up agreements" by promising to sell Merrill Lynch its valuable pigment and food businesses for $430 million if a rival bidder acquired a one-third stake in SCM.
Sir Robert Pirie, president of Rothschild Inc., Hanson's investment banker, has said that those businesses are really worth between $600 million and $700 million. By selling the operations for less than their fair market value, SCM management is trying to discourage Hanson from proceeding with its takeover bid, even though Hanson is offering $1 a share more for the company, Pirie said.
Hanson said the decision yesterday, overruling the U.S. District Court's opinion of Nov. 26, prevents SCM and Merrill Lynch from exercising their lock-up agreement. In another recent hostile takeover battle, Pantry Pride won control of Revlon Inc. after winning a similar legal fight over lock-up agreements in Delaware.
Hanson's takeover advisers have claimed for months that the SCM lock-up agreement is designed to block their bid so SCM management can maintain control of the company.
"SCM management is trying to get the company for itself, regardless of the best price for shareholders," Pirie said recently. "I know what is best for SCM stockholders is our offer."
Hanson had sales of about $3 billion and net income of $159 million in 1984. The company's better-known businesses in the United States are Hygrade Food products, which sells Ball Park hot dogs; and Endicott Johnson, which is a manufacturer and retailer of shoes.