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Nestle Hires Firm Led by Dreyer's Director

June 17, 2003|From Bloomberg News

Nestle, the world's largest food maker, will pay $13.2 million for advice on its purchase of Dreyer's Grand Ice Cream Inc. to an investment bank run by a Dreyer's board member, regulatory filings show.

M. Steven Langman, 41, is a founder of New York-based Rhone Group, which also is advising Oakland-based Dreyer's on asset sales to win antitrust approval of the $2.8-billion acquisition, according to filings.

Although U.S. regulators have reviewed and approved the arrangements, according to Nestle, corporate governance advocates say such relationships would not be permitted under proposed New York Stock Exchange and Nasdaq listing requirements because Langman is on Dreyer's audit committee.

"It's a double conflict of interest," said Michael Hoffman of the Center for Business Ethics at Bentley College in Waltham, Mass. "I doubt this would be allowed with the new listing requirements on the Nasdaq," where Dreyer's is traded.

Dreyer's and Nestle have been seeking the approval of the Federal Trade Commission. Nestle extended the deadline for purchasing Dreyer's until June 30 to give U.S. antitrust officials more time to review the transaction.

Langman declined to comment.

In May 2002, Nestle hired Rhone Group as a financial advisor, agreeing to pay the group $1.2 million when the purchase was announced and an additional $12 million if it is completed, the proxy filing said.

"We do not see a conflict of interest," said Nestle spokesman Francois-Xavier Perroud. "This state of affairs was fully disclosed to the SEC several months ago."

Dreyer's spokeswoman Dori Bailey confirmed the financial arrangements and declined to comment further.

Dreyer's shares rose 20 cents to $78.14 on Nasdaq.

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