TORONTO - As more details of international intrigue unfold regarding Lawson Mardon Group Ltd., Alusuisse-Lonza Holding Ltd. is proceeding with its takeover bid, undeterred by the controversy. Alusuisse-Lonza on Dec. 22 offered to pay C$14 (US$10.50) cash per share for all of Lawson Mardon's Class A and B shares, putting a value of C$555 million (US$416.3 million) on the Toronto company. It had owned about 4 percent of Class A shares.
The company in November disclosed its intent to make an offer for Lawson Mardon contingent on successful due diligence. On Nov. 12, Cragnotti & Partners Canada Inc. agreed to sell its controlling, 32.7 percent interest in Lawson Mardon to Alusuisse-Lonza.
Lawson Mardon directors recommended acceptance of the December offer, partly because the price is 40 percent higher than Lawson Mardon Class A shares' highest closing price in 1993. The offer is open until Jan. 13.
Controversy surrounded the firms during due diligence, but officials maintained a stoic public face, refusing to let discord scuttle the offer.
Just eight days before Alusuisse-Lonza's offer, Sergio Cragnotti, a Lawson Mardon director, was banned from stock trading in Ontario after allegedly trying to inflate Lawson Mardon's share price. Cragnotti is chairman of Cragnotti & Partners Canada's parent, Cragnotti & Partners Capital Investment SA of Luxembourg.
The Ontario Securities Commission charged that individuals and firms in North America, Luxembourg, Switzerland, Panama and the United Kingdom were involved in illegal stock trading.
Cragnotti also was arrested Nov. 19 in Italy by police investigating alleged bribing of government officials when state-owned energy firm Ente Nazionale Idrocarburi bought Montedison SpA's interest in Enimont SpA in 1990.
Alusuisse-Lonza's lawyer, James Kofman, said Cragnotti was arrested to provide evidence in the case.
``These were personal cases of Mr. Cragnotti and don't affect business as such,'' Hans Peter Held, spokesman for Alusuisse-Lonza of Toronto, said in a Dec. 22 telephone interview from Zurich.
``Our interest is in the business he is prepared to sell and not in Mr. Cragnotti himself.''
Lawson Mardon officials could not be reached for comment.
Alusuisse-Lonza wants to expand its international packaging business to about a third of its sales. Packaging accounted for about 25 percent of its 1992 sales of about $4 billion. The addition of Lawson Mardon, which reported sales of C$951.4 million (US$713.6 million) for the nine months ended Sept. 30, would allow it to meet or exceed that target.
Alusuisse-Lonza's packaging business is concentrated in North America. Most of Lawson Mardon's packaging operations are in Europe. Both firms have plastics packaging production facilities.
The Ontario Securities Commission ordered Cragnotti & Partners Canada to pay about C$2.7 million (US$2 million) for trying to inflate Lawson Mardon's share price.
The OSC banned Cragnotti and Cragnotti & Partners Canada from trading in Lawson Mardon shares for life, except in a takeover bid for all of Lawson Mardon's shares, as Alusuisse-Lonza has done.
Cragnotti and Roberto Marziale, sole director of Cragnotti & Partners Canada, also were banned for life from senior management of any public company in the province of Ontario.
OSC levied the penalties after Cragnotti and Marziale agreed to a settlement Dec. 14 after OSC investigators alleged the executives traded Lawson Mardon shares through nominee accounts to create false trading activity and an artificial price. They were accused of using insider knowledge of a Lawson Mardon share offering in trading and breaking other OSC trading rules, such as failure to file trading reports.
Kofman said Alusuisse-Lonza was aware of the investigations of Cragnotti by the OSC and Italian police before it agreed to buy Cragnotti & Partners Canada's share of Lawson Mardon.
No other Lawson Mardon officials were implicated in the OSC investigation.
Although Cragnotti and Cragnotti & Partners Canada made gains on paper by boosting share prices, Cragnotti lost US$618,000 in two illegal share transactions following Lawson Mardon's share issue on Oct. 14, 1992, according to OSC.
In the OSC settlement, Cragnotti stated his actions ``were motivated by [his] belief in the value of [Lawson Mardon],'' and not by desire for economic gain.
OSC lawyer Paige Brodie said of the C$2.7 million cash settlement, C$2.5 million (US$1.9 million) ``reflects [Cragnotti's] benefit'' from the trading. Another C$175,000 (US$131,000) was charged for costs by the OSC in its investigation. The funds were to be paid to Ontario's Minister of Finance.
Brodie denied the funds were fines, saying they were voluntary payments agreed to by both parties.
OSC said Giuseppe Berlini of Switzerland, a director of Cragnotti & Partners (Ireland), helped Cragnotti in share trading. Berlini owns Solem Gestion, a Swiss company incorporated in Panama, Isle of Man, Ireland, Liechtenstein and other places.
Solem Gestion controls Panama-incorporated Southport SA, which through an account at United Overseas Bank of Luxembourg, traded heavily in Lawson Mardon shares in September and October 1992. Torest Ltd. of Isle of Man, controlled by Berlini, engaged in share trading in November 1992 and spring of 1993.