BLOOMFIELD HILLS, Mich. — Former Irvine Co. director Max Fisher said Friday that although he had not considered selling his share of the company, he readily accepted Chairman Donald L. Bren's February, 1983, offer of $200,000 per share.
And Fisher, testifying as an Irvine Co. witness in heiress Joan Irvine Smith's suit against the company, said he helped persuade Detroit shopping center magnate A. Alfred Taubman that Bren's offer--which valued the company at $1 billion--was not too low.
Smith's suit alleges that Bren deliberately undervalued the company and that it really was worth in the $3-billion range.
Taubman had testified earlier this week that he believed that the company was worth up to $1.25 billion and initially was reluctant to sell to Bren.
In her suit, Smith alleges that her 11% of the Irvine Co.--which owns 65,000 acres of undeveloped land and thousands of acres of developed commercial and industrial properties in Orange County--was worth $330 million at the time of the sale, rather than the $110 million Bren wants to pay her.
During cross-examination Friday, Fisher said that less than a year before Bren bid $1 billion for the company, he had suggested that the directors value it at only $650 million for the purpose of purchasing then-President Peter Kremer's 1% share. Kremer's contract expired in July, 1982, and was not renewed.
To purchase the shares, directors valued the company at $750 million and gave Kremer $7.6 million for his 1%. Kremer left the company in January, 1983, but subsequently sued, claiming that he was defrauded. In an out-of-court settlement earlier this year, Kremer received an additional $5.5 million, which included several million in accrued interest.
In his testimony Friday, Fisher said that shortly after receiving Bren's offer, he jotted a note to himself that asked: "What is driving him--ego?"
Fisher said he believed that $1 billion represented a good price for the company and testified that he had grown concerned about declining operations and earnings in the early 1980s. He said he believed that the possibility of profiting from land developing was fading as "no-growth" groups proliferated in the county.
"All this told me we were going to have some serious problems in the next few years," Fisher said in explaining why he decided to sell to Bren.