Bid to go private has a public side

Vote: If the attempt to take Crown Central Petroleum private is successful, the Rosenberg family and its company will be able to extend a long association with the city.

March 04, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

The mood at Crown Central Petroleum Corp.'s headquarters on the 22nd floor of downtown's Blaustein Building has brightened considerably in recent months. The refiner's shareholders will vote Wednesday on an offer that would take the company private, and despite a bruising first-round rejection last summer, this time signs point to victory.

The move would end Crown's 66-year legacy as a public company but preserve a business that has been run by Chairman Henry A. Rosenberg Jr.'s family for seven decades and pave the way for the next generation to assume control and map the company's future.

It also would place Crown out of reach of unwelcome takeovers by out-of-state firms - it narrowly avoided one several months ago - and ensure its future in Baltimore. While the company employs only about 150 here, its impact on philanthropic activities has been strong, and those in the civic community are relieved that the company is staying put, regardless of whether it's publicly or privately held.

"Whenever we needed money, we would go to Henry," said state Comptroller William Donald Schaefer, former mayor of Baltimore and governor of Maryland. "The Rosenbergs are very good corporate people and have helped the city all along. If we would have lost their headquarters, it would have been bad."

Stockholders are to vote on an offer to sell their shares for $10.50 each to the Rosenberg family's holding company, Rosemore Inc. Shareholders rejected a similar proposal in August, but circumstances have changed. If they say yes this time, a company that has been synonymous with Baltimore's business community for more than 70 years will remain intact.

The refiner's roots here go back to 1910, when Rosenberg's maternal grandfather, Louis Blaustein, formed American Oil Co., selling kerosene from a horse-drawn wagon.

The Blausteins lost control of Amoco after a series of legal battles resulting from the acquisition of an affiliate by Standard Oil of Indiana in 1925, but they remained substantial shareholders. (Forbes magazine reported in 1998 that Blaustein descendants owned $1.6 billion in Amoco shares.)

A company led by Blaustein then bought a 48 percent share of Crown in 1930, which had been founded by Texas speculators 13 years earlier. Today, the Rosenbergs control 49 percent of Crown's A shares and 11 percent of its B shares, which have a tenth of the voting power of A shares.

The family's long history - as well as fabulous success - here is not lost on Rosenberg, who became president of Crown in 1966.

"If you get something out of the community, both monetarily and otherwise, as far as I'm concerned you're obligated, if you can, to put something back," said Rosenberg, 71. "That's the way I grew up and that's the way I've tried to live my life."

Despite his generosity and prominence in Baltimore's social circles, Rosenberg has had his share of critics. Unhappy investors have derided his management as Crown racked up $139 million in losses between 1990 and 1999, and its widely traded B shares sank from $36 in 1989 to a recent 52-week low of $6.25.

Union members waged a bitter and personal five-year boycott against the company - including attempts to derail the merger with Rosemore - after 250 of its members were locked out of Crown's Pasadena, Texas, refinery in February 1996 when contract negotiations broke down. Crown alleges that union members sabotaged the plant, a charge the workers deny.

Rosenberg said media coverage of these issues has been unfair to the company at times, which he finds "frustrating" but has generally learned to shrug off.

"Oh, sure, after all these years, you get beat up and turn the other cheek and get hit again. It's just disappointing because the business community is what supposedly makes it all tick," he said. "So when the media beats up on the business community I say, well, what the hell? Why should I be here, you know? Give me a break."

Labor settlement

The refiner and the union, the Paper, Allied-Industrial, Chemical & Energy Workers Union International (PACE), reached a settlement in January, and workers have begun returning to their jobs. As part of the agreement, PACE will not oppose the Rosemore proposal.

"If this [merger] is what Crown wants to do, I suppose that's OK with us," said Robert E. Wages, executive vice president of PACE.

Also working in favor of a positive vote is an agreement worked out with Apex Oil Co. of St. Louis, which had been trying for more than a year to take over Crown and oust Rosenberg. Apex's chief executive officer, Anthony Novelly, proposed in November 1999 that the two companies merge. Crown rejected the offer, and a bidding war between Apex and Rosemore ensued.

Although ultimately not successful in acquiring Crown, Novelly was instrumental in getting Rosemore to raise its offer for the Crown shares it doesn't already own from $8.35 to $9.35 to $9.50 to the current $10.50 - a figure that means the Rosenbergs would pay $82 million.

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