WBT Holdings LLC is negotiating to buy Richmond, Va.-based American Filtrona Corp. from its shareholders for $160 million, but a lawsuit against WBT's president could delay or nix the deal. In a news release, American Filtrona said it is not able to assess the effect the litigation may have on the completion or timing of the proposed sale. The transaction also will be subject to shareholder approval.
Shareholders must approve change of ownership by a two-thirds vote, said Ed Underwood, an analyst with Richmond-based Scott & Stringfellow.
American Filtrona had sales of $176.5 million last year. WBT Holdings has offered $43 per share. Filtrona's stock closed Nov. 12 at $42, up from $33 Nov. 7, the day the bid was announced.
``In my opinion, that's the low side of the value of the company,'' Underwood said of WBT's offer.
WBT is owned by several trusts for the family of the late Walter Bunzl. The company is not connected to the Bunzl Plastics empire in the United Kingdom.
The Rudolph H. Bunzl and Walter Bunzl family trusts together own 23-27 percent of Filtrona.
The Rudolph H. Bunzl trusts filed a lawsuit in U.S. District Court in Richmond against Bennett L. Kight, an Atlanta-based lawyer who is a board member of American Filtrona as well as a trustee for both Bunzl family trusts and president of WBT Holdings of Atlanta. He is not related to the Bunzl families.
The Rudolph Bunzl side alleges that Kight's concurrent service as trustee for both the Walter and Rudolph trusts is a conflict of interest with respect to the proposed purchase. Rudolph Bunzl, a retired Filtrona chairman, still serves on Filtrona's board.
According to the lawsuit, the beneficiaries of the Rudolph Bunzl trusts wanted to sell part of their American Filtrona stock and Kight opposed the action in favor of increased family control.
Walter Bunzl was the brother of Rudolph, who helped start WBT Holdings in 1954 and retired as chairman last year. The two families went their separate ways four years ago over disputes about how the company should be run. The suit alleges that Kight is working on behalf of the Walter Bunzl trusts and to the disadvantage of the Rudolph Bunzl family trusts. The beneficiaries of the Rudolph Bunzl family trusts do not want to block the purchase of American Filtrona, but want an injunction to keep Kight from acting further.
The company was No. 32 in Plastics News' pipe, profile and tubing ranking this year with sales in that segment of $64.8 million. It also was No. 120 in Plastics News' film and sheet ranking with related sales of $21.5 million. American Filtrona, with eight U.S. plastics plants, employs 1,150.