Dexter accuses its suitor

It says ISP is offering too little and using diversionary tactics

Takeover battles

February 10, 2000|By BLOOMBERG NEWS

WINDSOR LOCKS, Conn. -- Dexter Corp. accused rival International Specialty Products Inc. yesterday of waging a dishonest takeover battle and said it will provide ISP with data proving that its $933 million offer is too low.

Dexter also challenged specialty-chemical maker ISP to document its ability to fund the acquisition.

ISP already owns 10 percent of the company, which has annual sales of about $1 billion in materials used in products from food packaging to medical research. In December it offered $45 a share for the rest.

In a letter to ISP Chairman Samuel Heyman, Dexter Chairman and Chief Executive Officer K. Grahame Walker said ISP is trying to seize control of Dexter at less than a fair price and is attempting to distract attention from its own lagging performance. ISP said last month that fourth-quarter profit would be disappointing.

"With evidence of this kind of managerial dereliction so recently emerging," Walker said, "we are incredulous that you have apparently launched a campaign that deflects the focus from concentrating on improving your own poor results to one that will inevitably harass and distract Dexter's board and its management."

Last month, Wayne, N.J.-based ISP said it would engage in a proxy fight to elect new members to Dexter's board at its annual meeting in April in order to take over the company.

Walker also questioned ISP's financing arrangements for the proposed merger and called on ISP to disclose details of the credit-facility arrangements that it claims Chase Securities Inc. could provide.

Oldest company on Big Board

Dexter, founded in 1767, is the oldest company listed on the New York Stock Exchange.

Dexter, which earlier rejected ISP's offer, will suspend the so-called poison-pill takeover defense it adopted last year to any offer that Dexter's advisers consider fair, Walker said.

The company also will provide due-diligence data to ISP "for the purpose of ascertaining whether you are, indeed, willing to pay more."

An ISP spokesman wasn't available to comment.

"Do not misread the board's decision or its intentions," Walker wrote to Heyman. "We have made no decision to sell the company or to explore a sale of the company or to test the market for a possible sale of the company, and no one else will be invited into the data room."

When ISP made its offer, Heyman said the bid would be increased if Dexter would provide additional information justifying a higher price.

The offer was a 38 percent premium to Dexter's share price on Dec. 13, the day before the bid.

"The offer was a bit low," said Bob Goldberg, an analyst at New Vernon Associates in Parsippany, N.J. The due diligence from Dexter is "what Heyman has been after," Goldberg said. "Now we'll see if his offer is for real."

ISP and Dexter also are engaged in a running battle over Life Technologies Inc., a biomedical-research products company based in Rockville, Md.

Earlier this year, ISP rejected Dexter Corp.'s $49-a-share offer for the 25 percent of Life Technologies that ISP owns.

Dexter increased its ownership of the company to 74.8 percent from 71 percent, according to filings with the U.S. Securities and Exchange Commission.

1998 effort thwarted

Dexter's July 1998 plan to buy the rest of Life Technologies through a $37-a-share tender offer was thwarted when an investor group led by Heyman bought a 25 percent stake in Life Technologies and refused to sell.

ISP then began buying shares of Dexter.

Dexter shares rose 68.75 cents yesterday to close at $38.3125 on the New York Stock Exchange. ISP fell 25 cents to $7.25, and Life Technologies was unchanged at $49 in over-the-counter trading.

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