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Investment Group Wants to Meet With Potential Buyers of Gillette Co.

February 12, 1988|Associated Press

NEW YORK — A group led by Coniston Partners has accumulated a 6% stake in Gillette Co. and wants to meet with potential buyers of the company, the group disclosed Thursday.

Coniston, a partnership that was instrumental in the breakup of Allegis Corp., also indicated that it might seek representation on Gillette's board if the company did not take sufficient steps to boost its stock price.

The disclosure came after several days of renewed takeover speculation surrounding Gillette that sent the consumer products company's stock shooting higher.

Gillette rose $3.6225 to $41 a share in active New York Stock Exchange trading Thursday.

Coleman Mockler, Gillette's chairman and chief executive, said in a prepared statement that the company was satisfied that a recent restructuring was sufficiently boosting shareholder value and it would not be pressured into giving up its independence.

Mockler said the board would review Coniston's filing and "take whatever action is appropriate and in the best interests of shareholders."

Attempt to Meet Management

Coniston indicated it led a group that had acquired 6.76 million Gillette shares, or about 5.8% of the company's roughly 115.9 million shares outstanding.

The group said it acquired the shares because it believed that they were undervalued. Coniston also indicated that it would attempt to meet with Gillette management to determine the steps the company would take to boost its stock price.

The group said it might meet with potential acquirers to determine their interest in buying Gillette, and to compare the price they might offer against the benefits of a management plan.

Coniston also indicated that, based on the outcome of any discussions with Gillette and third parties, it might seek to gain seats on the company's board of directors at its 1988 annual meeting.

Gillette long has been the object of takeover speculation. Over the past two years the company has spurned several offers from Revlon Group, the latest a $5.41-billion proposal in August.

The companies signed a standstill agreement in November, 1986, after Revlon acquired a 14% stake in the Boston-based firm and made its initial unsuccessful offer for a $4.12-billion buyout. The pact prohibits Revlon from launching a tender offer without the consent of Gillette's board of directors--which adamantly has opposed takeover overtures.

After rebuffing Revlon in 1986, Gillette undertook a restructuring that included layoffs of about 2,400 workers and the sale of a number of its smaller businesses.

Last November, the company announced a reorganization that split it into two main units, one for its North American and European razor, razor blade, personal products and stationery products businesses and the other for international and diversified units.

Coniston's moves indicated it believed that Gillette was worth more than the stock market had valued it, and the group might realize a bigger profit from the proceeds of a buyout, breakup or other restructuring than it would from a long-term rise in the company's stock price.

Unilever a Potential Buyer

Keith Gollust, a general partner in the group, declined to identify the parties deemed potential buyers for Gillette, although rumored acquirers have included the British conglomerate Hanson Trust PLC and Unilever NV, the Anglo-Dutch consumer products company.

Coniston was instrumental in the chain of events that led to the breakup of Allegis last year.

Allegis, the parent of United Airlines, became a takeover target due to shareholder dissatisfaction over its strategy of expanding into a travel services conglomerate.

Coniston acquired a 14% stake in Allegis and threatened to launch a proxy fight for control of its board, proposing a breakup that it said would give shareholders greater value than the company's diversification strategy had.

Allegis chairman Richard J. Ferris eventually resigned under pressure and the company sold its Hertz Corp auto rental and its Westin and Hilton International hotel chains to raise money for a $2.84-billion payout to shareholders.

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