Fight brewing for control of Russ
By Brent Felgner -- Gifts & Decorative Accessories, 3/20/2006 1:56:00 PM
Oakland, NJ— In an effort to defend her board position, Angelica Berrie, whose late husband founded Russ Berrie & Co., is currently in due diligence to buy all or part of the corporation.
It’s an apparent move to counter a takeover bid from a private equity firm that has already stated its intention to seek the ouster of Berrie and several other board members aligned with her.
A filing with the Securities and Exchange Commission last week disclosed that Berrie is considering a bid specifically for the gift business, but might decide to make an offer for the entire company. She’s asked the company’s board to delay implementing any plans in the works, specifically for the gift business, for 45 days so she can complete her examination.
The filing did not disclose what the company’s plans may be. However, a filing last month by private equity fund Third Avenue Management (TAM) disclosed a 17.4 percent ownership interest and the possible acquisition of up to another 5 million shares of Russ Berrie stock, giving TAM a 41 percent control of the company. But under its own due diligence agreement with the company, TAM has also agreed not to seek additional control until June 23, 2006.
If it ultimately gains control, TAM has stated that it would seek Berrie’s ouster and that of other board members who also serve on the Russ Berrie Foundation and Russ Berrie Trust.
As of Berrie’s filing, the company’s board had not agreed to any delays.
A spokesman for the company declined comment, citing another filing Friday, in which the company stated it would be delayed in filing its annual report.
Angelica Berrie ran the company for more than a year after Russ Berrie died in late 2002. She is currently vice chairman, and beneficially controls 22.3 percent of the common stock, largely through her oversight of the Russ Berrie Foundation.
The company recently created a subsidiary to operate its gift business, and last week announced it had restructured a $95 million debt package in order to lower interest expenses. It is not uncommon for a company to create a subsidiary for a division it plans to sell.
In the meantime, another hedge fund, Royce and Associates, also reported in February that it had acquired a 3.49 percent interest in the firm.
Russ Berrie has endured difficult times since its founder’s death. More than a year after Berrie’s death, Angelica Berrie stepped aside as CEO to make room for former ToysRUs executive Andy Gato to run the firm.
In the notice of the delayed filing last week, Russ Berrie reported a full year loss of $33.2 million, compared to a $20.0 million loss the prior year. It reported a $16.7 million loss for the fourth quarter.
