Apex raises bid for Crown; 'Binding' merger with Rosemore put in jeopardy; Petroleum industry


A St. Louis oil company that has tried for months to take over Crown Central Petroleum Corp. threw a wrench into Crown's all-but-completed plan to go private when it increased its bid for the troubled Baltimore-based refiner.

Crown officials said yesterday that Apex Oil Co. Inc. has increased its cash offer to $10 a share, beating the refiner's $9.50-a-share buyout deal with Rosemore Inc., a private holding company owned by the family that also controls Crown. The deal values the company at $100.7 million.

Crown, shunning an Apex offer of $9.20 a share, accepted the Rosemore offer to buy all the stock it doesn't already hold last month. Rosemore, owned by the Rosenberg family, owns 11 percent of Crown's Class B stock and 49 percent of the Class A stock, which has 10 times the voting power of the Class B shares.

It was unclear yesterday how Crown would handle the latest offer.

Although Crown and Rosemore have what they refer to as a "binding" merger agreement, the April 7 compact has a number of caveats that would allow the refiner's board to back out of the merger and accept Apex's proposal.

For example, the agreement says Crown can't seek other bidders, but nothing prevents it from "engaging in any discussions or negotiations with ... any person in response to an unsolicited written competing transaction" and that Crown's board can accept a competing proposal if it would "result in a transaction more favorable to holders of company common stock than the" Rosemore proposal.

Crown shareholders have not voted on the Rosemore merger; a two-thirds majority is needed for approval.

"Once a company puts itself into play, like saying it's going private ... the board has a responsibility to create an auction, in a sense, for the company," said Richard Kolodny, a professor of finance at the University of Maryland's Robert H. Smith School of Business. "Until the shareholders sign off, it's open for bids, so to speak."

J. Steven Wise, a spokesman for Crown, said the board would be "guided by the merger agreement with Rosemore, Maryland law, Crown's corporate charter and the board's fiduciary duty to shareholders." There is no clear deadline for board action.

In its latest bid, which it faxed to Crown after the close of business Monday, Apex said it was not only increasing its bid for outstanding shares of Class A and Class B stock, but also upping the price it's willing to pay for a private placement of previously unissued shares. Apex said it would pay $10 per share, instead of the $9.50 a share previously offered.

Apex, which holds about 15 percent of Crown's Class A shares and 3.5 percent of the B shares, is also promoting its first proposal -- made in November -- in which Crown and Apex would merge and Crown's chairman, chief executive officer and president, Henry A. Rosenberg Jr., would be ousted. Such a merger also would value Crown's stock at $10 per share, according to privately held Apex. The Missouri company said that if after the merger, Crown's share price does not reach $12 for five days by the end of 2001, the company would pay shareholders the difference between $12 and the highest five-day average share price.

"We still firmly believe that a combination of Apex and Crown serves the best interests of our respective shareholders, employees, business partners and communities," Apex said in its letter Monday to Crown's board.

Crown has reported losses in eight of the past 11 years, and last week reported that it lost $3.6 million in first quarter on sales of $421.5 million.

Its Class A shares have fallen from more than $40 11 years ago to less than $5 in December.

The more widely traded Class B shares showed a similar decline and closed yesterday at $9.125, up 25 cents.

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